The yearly high of Bitcoin was approximately $31,000, but it has declined almost 15%. The recent regulatory actions against cryptocurrency exchanges Coinbase and Binance along with the Federal Reserve’s hawkish forward guidance have accelerated its sell-off. Despite this, Bitcoin has witnessed a 60% increase year-to-date and remains above the technical support level of $25,000. Furthermore, there are several reasons why a new bull cycle may commence.
Bitcoin halving
In April 2024, the next Bitcoin halving will occur, a predetermined event that reduces the cryptocurrency’s supply rate by half every four years. The previous three halvings of Bitcoin (in 2012, 2016, and 2020) have all been followed by substantial BTC price surges and new all-time highs. For example, since the previous halving in May 2020, BTC has increased by 276%.
According to analyst Lark Davis, the market will likely be in an accumulation phase until the halving, and he expects Bitcoin to test its highest value of $69,000 in the next 18 to 24 months. Some analysts even predict the price to reach $160,000 by April 2024.
BlackRock Bitcoin ETF
BlackRock’s recent application for a Bitcoin exchange-traded fund (ETF) with the United States Securities and Exchange Commission (SEC) has increased confidence in a potential BTC price rally leading up to the halving. The investment firm, which manages $8.5 trillion in assets, boasts a near-perfect approval record with the SEC for ETFs. The SEC is expected to respond to BlackRock’s application around March 2024, a month before the halving. If approved, the bullish prospects for Bitcoin could double after the halving, according to several analysts. before
Analyst Crypto Tea stated that “you are watching game theory at work,” and noted that “BlackRock understands the bitcoin halving is less than a year away. New supply will decrease while demand continues to increase from worldwide hyperinflation. They are asset managers who must capture Bitcoin’s performance before their competitors do.”
Bitcoin dominance rising
Following the SEC’s recent crackdown on Binance and Coinbase, numerous top altcoins have been under pressure, particularly those categorized as “unregistered securities.” This development has occurred alongside Bitcoin’s dominance in the crypto market crossing the 50% threshold for the first time in two years. Essentially, capital is shifting from altcoins to Bitcoin since the SEC does not perceive the latter as security.
As a result, BTC may be viewed as a “safe” investment compared to the 60-plus digital currencies the regulator considers securities. In light of this, MicroStrategy co-founder Michael Saylor has predicted that BTC’s market capitalization will increase to 80% of the total crypto market in the next few years.
He said:
“Regulatory clarity is going to drive Bitcoin adoption by eliminating the confusion & anxiety that has been holding back institutional investors. Bitcoin dominance will continue to grow as the #Crypto industry rationalizes around $BTC and goes mainstream.”
BTC price “bull flag”
Bitcoin’s technical analysis indicates that it is forming a clear bull flag pattern on its longer-term charts, which suggests that the cryptocurrency’s overall recovery rally will continue to trend upwards.
A bull flag pattern resolves itself when the price breaks above its upper trendline and rises as much as the height of the previous uptrend. As a result, Bitcoin’s bull flag target is around $35,500, a level that provided strong support in May 2021 and May 2022.
However, for Bitcoin to initiate a bull cycle, it will need to close above $35,500 decisively, since it would still be a lower high compared to the cryptocurrency’s previous bear market peaks.
Interestingly, Bitcoin’s price could be on the verge of a breakout in its current inverse-head-and-shoulders (IH&S) pattern, which is a bullish reversal pattern.
An IH&S pattern is confirmed by the formation of three troughs below a common neckline resistance, with the middle trough being deeper than the other two, which have roughly the same height.
Typically, an IH&S pattern resolves itself when the price breaks above the neckline and rises as much as the distance between the lowest point of the middle trough and the neckline. Sometimes, the price returns to retest the neckline as support after the initial breakout attempt.
Consequently, if Bitcoin rebounds from the IH&S neckline, its price could rally towards $40,500, up more than 60% from current price levels, which would confirm a new bull cycle.
(Reference: Cointelegraph)