Bitcoin bottom signal settles Aug 31, 3 hits in 15 years

A four-month chart pattern that has preceded every major Bitcoin cycle low in 15 years completes Aug. 31.

A signal that has marked a Bitcoin bottom three times in 15 years completes Aug. 31, with BTC near $65,000.

Oliver Velez, who publishes the weekly Bitcoin Intelligence Report, said the pattern has landed on a cycle low every time it has appeared.

The setup tracks the S&P 500/BTC ratio, which rises when equities outperform Bitcoin and falls when the cryptocurrency gains ground. Three consecutive rising four-month bars, each printing a higher high, have appeared only three times since 2011. In January 2015, the third bar closed with Bitcoin at $171, an exact cycle low that returned 90 percent a year later. In December 2018, it closed at $3,381, within 5.9 percent of the eventual bottom, and returned 94 percent. In November 2022, it closed at $16,197, again an exact low, returning 156 percent.

A fourth sequence is now live. The first bar closed in December, the second in April, and the third — which has already exceeded the prior bar's high — closes Aug. 31. Velez's failure condition is simple: if the September-to-December bar closes green, the signal breaks for the first time in 15 years.

Flow Data Points to a Bottom

Bitcoin closed last week at $65,050, up 3.6 percent, holding its 200-week moving average even as a hardware wallet exploit hit markets and the Clarity Act vote stalled. ETF inflows reached $865.3 million for the week, the strongest five sessions since June, with BlackRock's IBIT taking in 80 percent of the total. Exchange balances sit at a seven-year low and long-term holder supply is at an all-time high.

The Skeptics' View

Glassnode said on Aug. 5 that profitability compression had entered territory seen at previous bottoms, though institutional demand remained weak. Galaxy Research added on Aug. 7 that Bitcoin had repeatedly tested its 200-week moving average during July but that it was too early to declare a bottom. Fidelity has cautioned that Bitcoin's roughly four-year cycle rests on limited historical evidence and cannot time the market precisely.

As Velez put it, the buyers did not rescue the market — the sellers simply ran out. The Aug. 31 close adds a fourth data point to a pattern that has never failed, and the December bar will determine whether it holds.

This article is for informational purposes only and does not constitute investment advice.