If Bitcoin sits above $13,873 at the end of October, it will print its highest monthly candle close in history.
On a monthly candle chart, each candle represents one month of trading activity. Hence, a monthly chart typically covers years of trading activity on a single log chart, depicting the macro and long-term performance of an asset.
Across major cryptocurrency exchanges, the Bitcoin price neared $20,000 in 2017. On Bitfinex, it hit $19,891 on December 17th, 2017, recording its all-time high.
Yet, because the price corrected rapidly after achieving a new record-high, it dropped by 60% within the following two months.
A quick pullback was an expected reaction from the Bitcoin market due to the rapid run-up to $20,000.
In a healthy rally, the Bitcoin price gradually and consistently increases over a prolonged period, establishing clear support and resistance levels. The pattern of a rally followed by a consolidation phase strengthens the uptrend.
But in the case of Bitcoin in 2017, the rally happened in such a short period that there were no major technical support levels Bitcoin could fall back on.
As such, Bitcoin struggled to show resilience above $13,000 for most of the past three years, despite rising past $19,000 at its peak.
The ongoing Bitcoin rally appears different from previous bull cycles because this time, the price is rising gradually. Bitcoin has been claiming major resistance levels and consolidating afterwards, avoiding a sharp correction.
Due to the extended consolidation above important resistance levels at $12,500 and $13,000, derivatives traders are anticipating a move past $14,000. Light, a pseudonymous Bitcoin futures and options trader, said:
“OKEx futures orderbook asks being pulled/executed at market in [the] last few days as BTC consolidates. A move above $14k in [the] near term is increasing in probability.”
However, whether the monthly Bitcoin candle closes above $13,873 in October or November is of less significance. As long as the monthly candle closes above the previous high in the medium term, it would likely improve the already strong market sentiment.
According to Svenson, Bitcoin tends to see correlation with U.S. stocks 80% of the time. In the past week, the correlation between the two has weakened, as Bitcoin stayed resilient while the U.S. stock market dropped.
Bitcoin is, about 80% of the time, correlated to the S&P500 on the weekly chart according to the correlation coefficient tool ... about 20% of the time it has a low degree of correlation. The past 10 days fall into the 20% category.