Bitcoin's 47% Rebound Faces Historical Hurdles

Bitcoin (BTC) has surged nearly 47% from its low in July, but Binance Research warns that such rebounds often falter. The firm's data shows that in four out of five past instances, similar rallies retested their lows. The outcome typically depends on how deep the drawdown was from Bitcoin's peak. This time, the rebound occurred after a 35.6% drop from the high, placing it in a group where most rebounds failed.

Binance Research identified seven signals between 2011 and 2023 where Bitcoin closed at least 40% above its cycle low while remaining 25% or more below its all-time high. In two cases, where Bitcoin was 75.5% and 67.1% below its peak, the rebounds held and led to new highs. However, in the other five instances, where the drawdown was shallower (30% to 38%), four out of five retested their lows within 43 days. The team suggested that deep drawdowns exhaust forced selling, making rebounds more likely to reflect genuine demand.

The current signal triggered on September 3, with Bitcoin 35.6% below its high, placing it in the shallow-drawdown group. Binance Research noted that the October 1 close was at $84,880, 46.9% above the $57,800 low. The firm also highlighted that the current rebound is a second attempt from a similar position, offering no protection against a retest of the low.

Other factors could influence Bitcoin's next move this month. As of press time, BTC traded at $85,431, down 0.95% over 24 hours. To maintain the current signal, Bitcoin must set a new high above $126,200 before breaking below $57,800. Meanwhile, spot Bitcoin ETFs drew $2.39 billion in the week before September 28, but inflows slowed to $51.25 million over the next four sessions. Upcoming events, including US CPI data on October 14 and the Fed meeting on October 27-28, along with the Mt. Gox repayment deadline on October 31, could also impact Bitcoin's trajectory.