Crypto market sentiment has dropped to an over-one-month low as analysts warn of a potential Bitcoin (BTC) price correction below $50,000 as soon as this weekend.
Crypto trader sentiment drops to ‘extreme fear’
The Crypto Fear & Greed Index, a multifactorial measure of crypto market sentiment, fell to a one-month low of 22, last seen at the beginning of August.
Crypto Fear & Greed Index. Source: alternative.me
The index fell to 17 back when Bitcoin’s price fell to $49,000, shared analyst and CryptoQuant author Axel Adler in a Sept. 6 X post:
“During the mining ban in China, the index dropped to 10%. The maximum drop to 6% occurred during the Luna crash. HODL.”
BTC: Fear & Greed Index. Source: Axel Adler/X
The sentiment drop comes amid concerns of a September correction below $50,000.
Related: Bitcoin $110K setup ‘still in play,’ but analysts warn of sub-$40K dip first
Bitcoin could risk a correction below this key price level as soon as this weekend, warned Arthur Hayes, former CEO of crypto exchange BitMEX.
“BTC is heavy, I’m gunning for sub $50k this weekend. I took a cheeky short. Pray for my soul, for I am a degen.”
September BTC price dip in line with halving cycle
September has historically been a month of downside volatility, with average Bitcoin returns at -4.69%, making it the most bearish month based on average returns, according to CoinGlass data.
Bitcoin monthly returns percentage. Source: CoinGlass
Thus, the current correction remains in line with previous Bitcoin halving bull cycles, wrote crypto analyst Rekt Capital in a Sept. 6 X post:
“Bitcoin is down -6.19% for the month of September. This approximately matches the September single-digit downside experienced in 2022, 2021, 2020, 2018 and 2017. This downside is not out of the ordinary.”
This could bring more short-term downward pressure, added the analyst, sharing the below chart in a Sept. 6 X post:
“There’s that rejection from the orange diagonal (red circle). That’s why 4-hr candle bodies above resistance are so important to confirm the next trend. Upside wicks into/above the diagonal precede rejections.”
BTC/USD, 4-hour chart. Source: Rekt Capital
Zooming out, this correction could precede a breakout due to an emerging cup-and-handle pattern, a bullish price setup that signals the extension of an uptrend.
The bullish pattern was shared by popular crypto trader Mags in a Sept. 5 X post:
“Bitcoin is forming a massive cup and handle pattern.”
Bitcoin, cup-and-handle pattern. Source: Mags
Bitfinex analysts have also warned of a potential correction below $50,000 before the real bull rally. The analysts told Cointelegraph:
“This is not an arbitrary number, but based on the fact that the cycle peak in terms of percentage return reduces by around 60%–70% each cycle, and the average bull market correction has reduced as well.”
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.