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2 Reasons Why Bitcoin Price Could Challenge the Record High of USD 69,000 Before the Halving
Data from past cycles came in around halvings and a key technical analysis tool suggests that the path of least resistance is higher.
Bitcoin (BTC) has had a stellar few months and the leading cryptocurrency hit the highest level since late 2021.
While a price pullback seems plausible, the broader uptrend looks set to continue, with prices revising and potentially surpassing the all-time high of USD 69,000 ahead of the fourth Bitcoin Blockchain mining reward halving, which expires on April 19.
That's the message from 10X Research after studying the above data and a technical analysis indicator called the Relative Strength Index (RSI).
The theory that bitcoin, the leading cryptocurrency by market value, bottoms out 12 to 16 months before halving and signs uptrends before and a year after halving is already well known.
More importantly for traders, the previous three cycles focused on halving show that prices rose by more than 30% in the eight weeks leading up to the quadrennial event, which reduces the pace of supply expansion by 50%. The halving planned for April 19 will reduce the block reward from 6.25 BTC to 3.125 BTC.
"Bitcoin rises an average of 32% in 60 days before the halving," Markus Thielen, founder of 10X Research, told CoinDesk.
It BTC currently trading at $51,700. A 32% rally from here, according to previous data, means prices could trade near the all-time high of $69,000 on the day of the halving or sooner.
"The closer we get to the Bitcoin halving, the greater the likelihood that bitcoin will go higher, as evidenced by data from the last three cycles. This time will be no different, as the crypto community has a perception that the halving is bullish. This perception is certainly reaching the TradeFi community, which is aggressively buying these Bitcoin ETFs ahead of the halving," Thielen added.
Strong inflows into U.S.-based spot exchange-traded funds (ETFs) suggest bullish sentiment among traditional investors. These regulated ETFs allow investors to invest in cryptocurrency, avoiding the hassle of storing coins.
The RSI, developed by J. Welles Wilder, is a momentum indicator that measures the speed and change of price movements over a given period, typically 14 days, weeks, or months. Readings above 70 indicate strong bullish momentum in prices.
A week ago, bitcoin's 14-day RSI hovered above 80 for the first time since December. 12 of the RSI's previous 14 signals foreshadowed accelerating uptrends, producing an average gain of 54% over the next 60 days, according to 10X Research.
"For reference, Bitcoin was trading at $48,294 when the last signal was triggered, and if history (average return +54% over 60 days) is any guide, then bitcoin could rise to $74,600 based on this signal," Thielen noted.
Past performance is no guarantee of future performance, and macroeconomic factors alone could make or break trends. That said, the current macroeconomic outlook looks ripe for more risk-taking, thanks to the US pursuing the most accommodative fiscal policy in recent years. Goldman Sachs has raised its forecasts for the S&P 500 by 4% to 5,200, citing expectations of solid global economic growth and a weaker dollar.
Source: Cripto247.