Bitcoin (BTC) has been on a roll in recent months, with bulls ignoring a recovering U.S. dollar and U.S. Treasury yields, pushing the major cryptocurrency to its highest level since late 2021.
That's the message from 10X Research, which studied historical data and a technical analysis indicator called the Relative Strength Index (RSI). Let's discuss both in detail.
The theory that Bitcoin, the top virtual currency by market capitalization, will bottom out 12 to 16 months before the halving and will start trending up one year before and one year after the halving is now well known. ing.
More importantly for traders, in the previous three cycles around the halving, show prices soared more than 30% in the eight weeks leading up to the quadrennial event, slowing the pace of supply expansion by 50% That's what I did. During the halving scheduled for April 19th, the reward per block will be halved from 6.5 BTC to 3.25 BTC.
“Bitcoin rose an average of 32% in the 60 days before the halving,” Markus Thielen, founder of 10X Research, told CoinDesk.
At the time of writing, Bitcoin was trading around $52,000. Based on historical data, a 32% increase from here means the price could trade near its all-time high of $69,000 on or before the halving date.
“As evidence from the past three halving cycles shows, the closer we get to Bitcoin’s halving, the more likely it is that Bitcoin will rise. This time is no exception as awareness is high.'' This awareness is definitely flowing into the TradeFi community, which is actively buying these Bitcoin ETFs ahead of the halving,'' Thielen added.
Strong inflows into U.S.-based spot exchange-traded funds (ETFs) suggest a bullish mood among traditional investors. These regulated ETFs allow investors to avoid the hassle of storing their coins and gain exposure to cryptocurrencies.
Developed by J. Welles Wilder, the RSI is a momentum indicator that measures the speed and change in price movements over a period of time (usually 14 days, weeks, or months). A reading above 70 indicates strong upward momentum in price.
A week ago, Bitcoin's 14-day RSI rose above 80 for the first time since December. According to 10X Research, 12 out of 14 such historical RSI signals predicted an acceleration of the uptrend, resulting in an average increase of 54% over the following 60 days.
“For reference, when the last signal occurred, Bitcoin was trading at $48,294, and if history (60-day average return +54%) is any indicator, then based on this signal Bitcoin was trading at $48,294. It could go up to $74,600,” Thielen said.
Past performance is no guarantee of future results and macroeconomic factors can independently make or break trends.
Having said that, the current macro situation appears to support increased risk-taking thanks to the US. the most exciting run Fiscal policy for several years. Goldman Sachs raised its year-end forecast for the S&P 500 index by 4% to 5,200, citing expectations for strong global economic growth and a weaker dollar.
