Bitcoin Price Could See 40% Rally as Miner Buy Signal Flashes
A “buy” signal from a miner-based indicator is attracting attention as it predicts another major move for Bitcoin. According to 10X Research, this signal has been bullish 10 times in the past. Eight of those times have been positive results, producing a median return of 58.6%, and an average return of 41% overall.
Bitcoin Miner Signal Points to Potential Upside
This newest variant of the miner signal is compelling because of its historical success rate. Of the 10 signals documented by 10X Research, eight have been positive. This gives the signal an 80% success rate historically, but like all new signals, there is danger in extrapolating too much. Two previous signals are followed by sharp losses of 24% and 40% respectively, meaning it is prudent to treat this as a market signal and not a price signal.
The positive return signals of 58.6% and 41% respectively are exciting. If Bitcoin mimicked the average historical move of 41%, the potential upside would be greatly amplified. However, the next price target can never be determined based solely on historical trends.
BTC Price Structure Still Matters
In the context of other recent movements of BTC, the $82k high reached on the 4th of September is another detail to consider. BTC was trading at approximately $77.6k on the 14th of September, which put the cryptocurrency under the important $80k support, according to Barron’s.
Looking at Bitcoin’s previous price movements, the general trend has been for Bitcoin to be trading above the July levels. BTC was up 23.8% since July 10 and September 10, based on the statistics from StatMuse. This suggests that, generally, the market has recovered strongly. Largely, Bitcoin will continue to be volatile and recover in the short term.
Fed Decision Still a Threat to the Bullish Structure
A major macro catalyst is the Federal Reserve’s policy meeting in September and the miner’s signal. From the data released for this month’s inflation, ([Reuters][5]) 85% of the economists surveyed by Reuters expect the Federal Reserve to raise interest rates by 25 basis points on the 15th and 16th of September.
August’s data showed a monthly increase of 0.4% in CPI, and a 3.4% increase compared to the same month last year. Core CPI also increased by 0.3% on the month. Interest rate futures put the chance of a September rate increase at 90% by the 14th.
Generally, rising interest rates will slow the market and put a focus on hauling investments that pay yields. Based on this assumption, while the miner signal is historical bullish, the upcoming meeting of the Federal Reserve may very well break the market down after it has been generally recovering.
Generally, the 10X Research indicator gives a historical case to be positive about, especially considering the reported average return of 41% for Bitcoin investments. However, investors should not view this as a certain price target for Bitcoin. With Bitcoin trading around the $78,000 mark, there could be resistance in the $80,000–$82,000 range prior to the anticipated Fed meeting and decision.
