2 Reasons Bitcoin Might Encounter All-Time High of $69K Before Halving

from prior cycles surrounding halvings and an important technical analysis tool suggest that the most likely path is upward.

Historically, Bitcoin tends to surge by more than 30% in the two months leading up to theving event, as stated by 10X Research. The upcoming fourth halving of Bitcoin is set for April 19th.

Bitcoin's daily RSI has moved above 80, a level that has previously indicated gains of more than 50% over a 60-day period.

Bitcoin has seen a strong performance in recent months, with buyers largely ignoring the rising U.S. dollar and Treasury yields to drive the primary cryptocurrency to its highest level since late 2021.

Despite the possibility of a price decline, the overall upward trend seems likely to continue, with prices potentially reaching and surpassing the record peak of $69,000 before the fourth halving of the Bitcoin Blockchain, scheduled for April 19.

This analysis comes from 10X Research after examining historical data and the RSI technical analysis tool. Let's delve deeper into both aspects.

Anticipation Before Halving

The theory that Bitcoin hits a low point 12-16 months prior to halving, leading to upward trends before and after the halving, is widely accepted now.

Notably, the previous three cycles centered on the halving have shown that prices surged by more than 30% in the two months leading up to the halving event that decreases the pace of supply growth by 50%. The upcoming halving on April 19 will cut the reward per block to 3.125 BTC from 6.25 BTC.

"Typically, Bitcoin sees a surge of around 32% in the 60 days preceding the halving," shared Markus Thielen, founder of 10X Research, with CoinDesk.

Currently, Bitcoin is hovering around $52,000. A 32% increase from this point could potentially push prices close to the all-time high of $69,000 on or before the halving date.

"The closer we get to the Bitcoin halving, the more likely it is that Bitcoin will rally, as seen in the last three halving cycles. The prevailing sentiment in the crypto community is that the halving will bring positivity. This conviction is notably impacting the TradeFi community, which is actively investing in these Bitcoin ETFs before the halving," Thielen further explained.

Healthy inflows into U.S.-based spot exchange-traded funds (ETFs) point towards an optimistic outlook among traditional investors. These regulated ETFs allow investors to access cryptocurrencies without needing to store them.

Monthly RSI Signals Industry

RSI, conceived by J. Welles Wilder, is a momentum gauge that measures the pace and change of price movements over a specific duration, usually 14 days, weeks, or months. Readings over 70 signify a robust upward momentum in prices.

A week earlier, Bitcoin's 14-day RSI moved above 80 for the first time since December. 12 out of 14 previous RSI signals similar to this one have anticipated accelerated upwards trends, generating an average gain of 54% within the following 60 days, according to insights from 10X Research.

"For instance, Bitcoin was priced at $48,294 when the previous signal occurred, and if history (average return +54% in 60 days) is any indication, then Bitcoin could climb to $74,600 based on this signal," Thielen noted.

Past performance doesn't guarantee future outcomes, and broader economic factors could significantly influence market trends.

Nevertheless, the current macroeconomic perspective seems to support a higher risk appetite, attributed to the U.S. implementing the most stimulative fiscal policy in years. Goldman Sachs raised its year-end forecast for the S&P 500 by 4% to 5,200, citing expectations of strong global economic growth and a weakening dollar.

FAQ  

Q. What is a cryptocurrency, please? 

Ans. A digital or virtual currency that functions without the intervention of a central authority, such a bank or government, cryptocurrency employs cryptography for security.

Q. How do cryptocurrencies operate?

Ans. Blockchains are decentralised networks on which cryptocurrencies operate. A public ledger is used to record transactions, and a network of computers, or nodes, validates them using intricate mathematical formulas.

Q. What is blockchain technology?

Ans. A distributed ledger system called blockchain keeps track of every transaction made via a network of computers. Every transaction is kept in a "block," which is connected to every other block to create a chain of blocks.

Q. What is a bitcoin, exactly?

Ans. The earliest and most well-known cryptocurrency is called Bitcoin, and it was developed in 2008 under the pseudonym Satoshi Nakamoto by an unidentified individual or group of individuals. Peer-to-peer transactions can be conducted using it on a decentralised network without the involvement of middlemen like banks.

Q. How can one purchase cryptocurrency?

Ans.  Fiat money (such as USD, EUR, etc.) or other cryptocurrencies can be used to buy cryptocurrency on online exchanges. After opening an account and depositing money, users usually submit buy orders for the chosen cryptocurrency on the exchange.

Q. Is using cryptocurrency allowed?

Ans. Each country has different laws regarding cryptocurrencies. Some nations have accepted it and regulated its usage, while others have put limitations or outright bans on it.