Bitcoin price has been unable to break out of its current downtrend after losing $60,000 this week, trading as low as $57,790 on Tuesday. However, one indicator is pointing to further price corrections for the market’s largest cryptocurrency, which could see the coin drop well below current levels.

Bitcoin faces grave risks

In the recent social media postCryptocurrency analyst Ali Martinez pointed out the stochastic relative strength indicator (RSI) on bitcoin’s two-month chart, which recently signaled a trend change from up to down.

This is notable because historical patterns over the past decade have shown that similar signals have often preceded significant price corrections at 84%, 59%, and 75.5% on average.

Stochastic RSI is a momentum oscillator that measures the closing price level of a security relative to its price range over a specified period. When it indicates a downtrend, it suggests that the asset may be overbought and a price drop is imminent.

Interestingly, the last significant trend change occurred in 2022, when Bitcoin was trading at around $60,000. Following that signal, the cryptocurrency fell sharply to a cycle low of around $16,000 before beginning a rebound that culminated in recent all-time highs of $73,700 in March of this year.

If the current downtrend continues, Bitcoin could face a drastic drop. If a 75% correction from the current $57,000 trading level materializes, the largest cryptocurrency could potentially fall to around $14,200 per coin.

Such a significant drop would likely dampen hopeful expectations for the market, especially in a year marked by the Halving event that took place in April and which has historically been a catalyst for price increases.

Can BTC bounce back after September?

In addition to the bearish market sentiment that could spell trouble for BTC in the compact term, the leading cryptocurrency is facing a arduous September, which has historically been considered its worst month.

Market Expert Alex Thorn emphasizes that over the past decade, Bitcoin’s value has fallen in seven of the last ten Septembers, with losses ranging from 5% to as much as 18%.

However, Thorn points out that October tends to be a keen contrast to the September declines. Historically, October has been Bitcoin’s best month, with the cryptocurrency often rebounding significantly. Gains in October have typically ranged from 20% to 52%, making it a critical month for growth investors.

If Bitcoin manages to hold lower support levels and successfully navigate September’s challenges, the market could see solid performance in October.

Featured image from DALL-E, chart from TradingView.com