Bitcoin shows signs of final dip before potential rally to $70,000

Bitcoin (CRYPTO:BTC) recently rebounded to $57,226 after dropping to $53,930, driven by fear-driven shorting on major crypto exchanges. 

While some market participants hope for a sustained recovery, on-chain data and technical indicators suggest BTC may face one more dip before a potential rally in the final quarter of the year. 

According to Santiment, the recent upswing in Bitcoin’s price was influenced by heavy Fear, Uncertainty, and Doubt (FUD), which led traders to heavily short BTC on major exchanges like Binance and Bitmex. 

Historically, such pessimistic investor sentiment often triggers a bounce, and if these short positions continue to dominate, Bitcoin could see further upward movement. 

However, other indicators, such as the Delta Cap, point to a more cautious outlook. 

The Delta Cap, which analyzes Bitcoin's Realized Cap to identify potential bottoms, currently shows a significant gap between the Delta Cap at $407.36 billion and the Realized Cap at $621.35 billion. 

This suggests Bitcoin may be near its bottom, but not quite there yet. 

As a result, BTC could experience another decline before entering a sustained uptrend. 

Crypto analyst Rekt Capital supports this view, noting that if historical patterns repeat, Bitcoin could be poised for three consecutive months of positive returns after surviving September. 

This aligns with the idea that the market might see a final pullback before a strong rally in the last quarter of the year. 

Based on technical analysis, Bitcoin needs to break through key resistance levels to maintain any upward momentum. 

BTC must close above the 20-day Exponential Moving Average (EMA) around $58,000 to continue its gains. 

If it surpasses the 50-day EMA near $60,000, the bearish outlook could be invalidated, potentially paving the way for a rally toward $70,000. 

However, if it fails to break these resistance points, Bitcoin may fall to $56,209 or even $52,954, suggesting that traders should exercise caution. 

At press time, the Bitcoin (BTC) price was $57,014.08.