Source: Cointelegraph
Original: ( When these two technical patterns form, the price of Bitcoin (BTC) is guaranteed to see an increase of no less than 50% )
Key Points Summary:
Bitcoin price increases are often associated with investors' inflation concerns or better-than-expected economic growth data, but clear upward signals are rare. However, history shows that when three independent events occur simultaneously, it often accompanies price surges of 50% or more for Bitcoin.
When the Federal Reserve's policy expectations ease, the cryptocurrency market's leverage ratio is low, and strong retail data supports bullish momentum, Bitcoin often experiences significant rises. The last time these three conditions were met simultaneously was in early 2024, when the price of Bitcoin climbed from $40,000 to $73,500 in seven weeks.
Similar increases were observed in early 2023, when the same three driving factors worked together, propelling Bitcoin from $16,700 to $25,100 in seven weeks. The third case dates back to July 2021, where a 76% price increase was ultimately achieved.
Bitcoin rose 84% from January 25 to March 13, 2024
After stagnating around $43,000 in December 2023, Bitcoin's price tested the $48,000 level in early January 2024. After a failed breakout, the price sharply fell to $37,800 by the end of January, coinciding with the start of a seven-week bullish trend. A key factor in this phase was the exceptionally low funding rate for perpetual contracts, at only an annualized 4%.
Other factors influencing price reversals include: the U.S. retail sales data for December 2023 released on January 17, 2024, which exceeded expectations with a month-on-month increase of 0.6% (expected was 0.4%); and Federal Reserve Chairman Jerome Powell's remarks at the January 31, 2024, press conference, signaling a tightening of monetary policy and indicating no rate cuts in the short term.
Bitcoin rose 50% from January 3 to February 20, 2023
Before this round of increases, Bitcoin had consolidated below $18,000 for two months, leading to extremely low demand for leveraged long positions, with the perpetual contract funding rate nearing zero reflecting this situation.
The market landscape changed on January 3, 2023, when Binance's funding rate surged to 50% within four days. This change coincided with January 2023's retail sales data exceeding expectations, showing a month-on-month increase of 3% (market consensus was 1.9%). Notably, Federal Reserve Chairman Powell also hinted at adopting a tighter monetary policy to combat inflation during his speech at the Swedish central bank on January 10, 2023.
Bitcoin 76% Increase Cycle: July 20 - September 7, 2021
From July 20 to September 7, 2021, Bitcoin rose 76%. The month prior, the Bitcoin price fell below $30,000 from $40,000, with market sentiment being low. In the following two weeks, the annualized funding rate for Bitcoin suddenly surged from 0% to 37%, while June 2021's U.S. retail sales data unexpectedly increased by 0.6% month-on-month (market expectation was a decline of 0.4%).
During this period, Powell's remarks at the Jackson Hole Economic Symposium on August 27, 2021, hinted at a potential reduction in the central bank's asset purchases, which is a policy measure to curb inflation.
The next potential rise for Bitcoin
The commonality among these significant upward movements is a reduced market expectation for the Federal Reserve's expansionary policies and low initial leverage demand from Bitcoin bulls. When these factors coincide with strong retail data, ideal conditions for a Bitcoin bull market are created, as traders often remain cautious before a potential economic downturn.
Looking ahead, Federal Reserve Chairman Powell will speak after the central bank's interest rate decision on June 18. Other key dates include the release of the economic beige book on July 16 and the Jackson Hole Economic Symposium starting on August 21. Also noteworthy are the May retail data to be released on June 17 and the June data on July 15.
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This article is for informational purposes only and does not constitute any legal or investment advice. The views expressed herein are solely those of the author and do not represent the position of Cointelegraph.
