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Can BTC hold support and continue to new highs this cycle?
Since Bitcoin’s test of $53,500 on the 5th of July, it had been straight up and to the right all the way to its ultimate short term high of $70k and change on the 29th of July. At that point we saw a sharp reversal with the oscillators rolling over.
$70,000 is a strong psychological level for traders. Let’s take a look at the chart, which I modified slightly from the last article, which you can review here.
We can see BTC is testing the trendline from recent lows, which is showing higher highs and higher lows. That’s a productive pattern in and of itself, but it isn’t enough to guarantee a continuation.
BTC has been in a long consolidation that started back in March at the new highs, with a $20k range from low to high. A breakout of that range to the upside should theoretically bring us to the $93k-95k area, which is a minimum target that many have set for this cycle.
Currently a decisive breakout above $69,000 would provide support to $70K and we should see a move toward all-time highs. On the other hand, if the BTC price falls below $65,000, this will bring it to its 50-day EMA and mark $64,000 as a crucial support level.
So, why is BTC having such a hard time moving out of this range in this cycle? The short answer is “we don’t know.” Some theories include doubts about BTC’s future use case, ETF outflows, continued selling by governments, including the U.S., as the current administration doesn’t seem to share the enthusiasm of former President Trump and independent candidate Robert Kennedy Jr. In fact, Arkham Analytics revealed the US government’s transfer of $2 billion worth of Bitcoin to 2 new wallet addresses, fueling the fires. Others speculate that perhaps BTC is now going to behave like other assets and have normal percentage moves from this point forward (7-10% per annum).
Since the beginning of 2024 BTC has been in a pattern where it rises to key levels of strong resistance and then rejects down to major support areas. By mid-January, BTC had reached a multi-year high of $47,000 after the BTC Spot ETF was released. A quick rejection occurred, and BTC dropped below $40,000 over the next few days, then began a new move higher. In early March the price hit a new all-time high at $69,000 and quickly fell to below $60,000 in the next few hours. Massive swings, which can wipe out leverage traders, but provide opportunity for long term position builders.
We still believe BTC can see the $100k level by the end of this cycle. A move out of the current range would measure to $93-$95k, as mentioned above. At that point the psychological pull of the $100k level will be too great for bulls to resist. Bears will then likely use that level to trigger a sharp correction.
Of course, this is all speculation, and unlike the wizard in the image above, we don’t have a crystal ball. Unless you’ve been hiding in a Spanish cheese cave for the last few years you realize that our world is in a very precarious spot. On the surface this could be BTC bullish, but as the asset matures it will continue to act more like other risk assets, which are volatile and move in concert with global and market events.
Our theory at this point in time is continued volatility and range action between now and the U.S. elections in November. If the current administration does indeed sell off the 200,000 BTC it holds from seizures that will definitely stall any upward momentum in our opinion. If former President Trump continues to gain momentum and it’s clear that his opponents are not in a position to win, we could see a gradual upwards move or a holding pattern around the previous all-time high.
If Trump wins, we would definitely be long BTC and we would expect all-time highs to be exceeded and that $100k target achieved quickly. If the opposition wins, this writer will be moving to another country and would not be long BTC at that point. All bets are off.
A breakout above $69000 would provide support to $70K and further push toward An all-time high. This can happen if the US political news and ETF outflow are neutralized.
Conversely, if Bitcoin falls below $65000, this will bring it to the 50-day EMA price and make $64,000 as a key support. In terms of sentiment, the onchain analytics platform CryptoQuant pointed out increasing withdrawals from exchanges. This is typically bullish, as it means BTC is being put into private wallets or cold storage, indicating an intention to HODL
To conclude, as we write this BTC is holding the upwards trendline. However, as we pointed out above there are short-term challenges to the current momentum. We would exercise caution here and wait for a firm indication of direction to present itself. Long-term traders could place bids down at $64k-$65k, with some stink bids at $60k in case we get a wick fill of some of the orders likely to be hanging out down there.