This rally marks a notable rebound from its previous positions, suggesting the start of a bull market.
Bitcoin has recently witnessed a significant rally, surpassing the $44,000 mark for the first time since the early months of 2022. This impressive rise is driven by a combination of factors, including a decline in interest rates and growing enthusiasm for the possible launch of a Bitcoin ETF (Exchange-Traded Fund) in the United States.
The Catalysts Behind Bitcoin’s Momentum
A key element driving Bitcoin’s rise is growing interest from institutional investors along with the anticipation of regulatory green lights for BTC spot ETFs in the US. This combination has not only driven Bitcoin’s value above of the psychological threshold of $42,000, but has also led market analysts to project ambitious future valuations for the cryptocurrency.
Bloomberg, for example, has suggested that this could be the start of a new supercycle, potentially catapulting Bitcoin’s value to unprecedented heights, even beyond $500,000, as it becomes increasingly integrated into major financial systems.
The indicator to watch is Bitcoin’s ability to maintain and extend its gains above the $45,000 mark. Doing so could transform current resistance levels into support zones, paving the way for the cryptocurrency to reach and potentially surpass the $50,000 mark.
In an extremely bullish scenario, Bitcoin’s rise could even reach the $55,000 resistance level and extend towards the $65,000 mark, representing a more than 50% increase from current levels.
The Role of Market Mechanics
Several market indicators support such optimistic forecast. The Relative Strength Index (RSI), for example, shows increasing momentum in Bitcoin’s value.
Furthermore, the green bars of the Awesome Oscillator (AO) histogram in positive territory indicate strong market dominance by the bulls. These indicators collectively reinforce the bullish sentiment surrounding Bitcoin.
Historically, Bitcoin has shown significant price increases following halving events. With this pattern, it is speculated that Bitcoin could reach $150,000 in the second half of 2024 and potentially skyrocket to $250,000 in 2026.
Did Retail Traders Miss Recent Bitcoin and Ether Gains?
On December 5, USDT’s premium against the yuan reached 1%, a modest improvement from previous weeks. However, it remains within the neutral range and has not exceeded the 2% threshold for more than half a year. Whether retail flow leans towards bitcoin or altcoins, China-based investors primarily need to convert cash into digital assets.
Turning attention to Google Trends, searches for “buy bitcoin” and “buy crypto” reveal a stable pattern over the past three weeks. Although there is no definitive answer as to what sparks the interest of new retail traders, these queries usually revolve around how and where to buy cryptocurrencies.
It is especially notable that the current rate for the last 90 days is approximately 50%, showing no signs of recent improvement. This data seems to contradict logic, given that bitcoin is up 53% over the last 50 days, while the S&P 500 is up 4.5% over the same period. Importantly, when viewed over a longer time frame, current search levels are still a staggering 90% below their all-time high in 2021.
Finally, it is crucial to delve into the derivatives markets, specifically perpetual futures, which are the preferred instrument of retail traders. Also known as reverse swaps, these contracts have a built-in rate that accumulates every eight hours. A positive funding rate suggests greater demand for leverage by longs (buyers), while a negative rate indicates that shorts (sellers) are seeking additional leverage.
By Leonardo Perez
