Bitcoin (BTC) recovered barely on Aug. 20 however remained on target to put up its worst weekly efficiency previously two months.

Bitcoin hash bands flashing backside sign

On the every day chart, BTC’s value rose 2.58% to $21,372 per token however was nonetheless down practically 14.5% in weeks, its worst weekly return since mid-August. Nonetheless, some on-chain indicators are suggesting that Bitcoin’s correction part could also be coming to an finish.

These embrace Hash Ribbons, a metric that tracks Bitcoin’s hash fee to find out if miners are in accumulation or capitulation mode. As of August 20, the metric reveals that miner capitulation is over for the primary time since August 2021, which may trigger value momentum to change from adverse to optimistic.

Bitcoin hash band. Supply: Glassnode

Nonetheless, Bitcoin has been unable to shake off a barrage of prevailing adverse indicators, starting from adverse technical setups to its ongoing publicity to macro threat. Subsequently, regardless of bullish on-chain metrics, a bearish continuation can’t be dominated out.

Listed below are three the reason why Bitcoin could not have bottomed out but.

BTC value rising wedge is collapsing

Bitcoin’s value drop this week has triggered an increase within the wedge, hinting at extra losses for the crypto within the coming weeks.

Rising wedges are bearish reversal patterns that kind after value rises inside a contracting ascending channel, however resolve after value breaks down from it, which may end up in a decline to the peak of the maximum wedge.

BTC/USD every day value chart with “rising wedge” breakdown. Supply: TradingView

Making use of technical ideas to the BTC chart above reveals $17,600 because the goal for the rising wedge breakout. In different phrases, the bitcoin value may fall by round 25% by September.

Bitcoin bulls misinterpret the Fed

Bitcoin was up about 45% throughout its rising wedge formation after bottoming out domestically round $17,500 in June.

Curiously, the time of bitcoin’s bullishness coincided with rising investor expectations that inflation has peaked – and that the Federal Reserve would begin chopping charges as early as March 2023.

The expectations emerged from Fed Chair Jerome Powell’s July twenty seventh FOMC assertion.

Powell:

“As financial coverage tightens additional, it can doubtless turn out to be applicable to gradual the tempo of will increase whereas we assess how our cumulative coverage changes have an effect on the financial system and inflation.”

Nonetheless, the Fed’s newest dot plot reveals that almost all officers count on charges to hit 3.75% by the top of 2023, earlier than falling again to three.4% in 2024. Subsequently, prospects for fee cuts stay speculative.

Implied Fed Fund Goal Fee. Supply: Federal Reserve

St. Louis Fed President James Bullard additionally mentioned he would assist a 3rd straight hike of 75 foundation factors on the September central financial institution assembly. The assertion is according to the Fed’s dedication to convey inflation right down to 2% from the present 8.5%.

Associated: Choices knowledge reveals Bitcoin’s short-term uptrend is in jeopardy if BTC falls beneath $23,000

In different phrases, Bitcoin and different dangerous property, which slipped into bear market territory when the Fed started an aggressive tightening cycle in March, ought to stay underneath strain for the subsequent a number of years.

If historical past is any indicator…

The continuing restoration in bitcoin value may turn out to be a false bullish sign given the asset’s comparable rallies throughout earlier bear markets.

Weekly BTC/USD value chart. Supply: TradingView

BTC’s value rallied practically 100% throughout the 2018 bear market cycle – from round $6,000 to over $11,500 – solely to fully erase good points and drop to $3,200. Notably, comparable recoveries and corrections additionally happened in 2019 and 2022.

The views and opinions expressed herein are solely these of the creator and don’t essentially mirror the views of Cointelegraph.com. Each funding and trading transfer entails threat, you need to do your personal analysis when making a call.