On the one hand, Bitcoin is still approximately 75% down from its ATH. On the other, BTC is relatively strong, having clawed back all its losses from the FTX fiasco and surpassing its short-term holder basis.
So maybe, just maybe, the bottom of the bear market is in the rearview. Is the refueling stage before a bull market tear?
Here are three reasons why BTC could launch off this year:
1 — A SOFT LANDING FOR GLOBAL MARKETS
After the doom and gloom of ’22, what if we could avoid a global financial meltdown? As of now, the data is looking positive.
The U.S. added 517,000 jobs in February, a surprising and positive indicator. North America is seeing decreased inflation as well as increased supply after two years of circulation disruption.
Canada is holding steady at 4.5% for its benchmark interest rate, without further increases expected. The S&P500 and the TSX are both up roughly 7%.
While previous inflationary environments have been caused by outrageous demand, this time the cause is more based in supply-chain issues and soaring energy prices.
With supply increasing and a milder winter behind us, inflation should continue to ease.
Therefore, if a global economic recession can be avoided, the runway looks clear for risk-on assets like crypto and tech stocks to take off.
2 — THE PRESIDENTIAL CYCLE
According to Investopedia, the third year of a U.S. presidential cycle typically has the highest and most consistent stock market gains.
Known as the Best Six Months Theory, the sweet spot is from January to July of a pre-election year, which is this year ahead of the 2024 Presidential election.
Here are the numbers: the third year in a presidential cycle averages gains of 16.3%. The NDX (Nasdaq 100) typically offers investors 24% on average.
The most recent example of this cycle was 2019: a blockbuster year for stocks, boosting gains of 31.5%.
You might be asking how this relates to Bitcoin? As I’ve previously written, BTC can’t truly take off without a positive macro environment. If U.S. equities turn bullish, Bitcoin will follow.
While the data is limited, the year after U.S. midterm elections have seen boosts 82% of the time dating back to 1933, a ninety-year span.
3 — THE GOLDEN RATIO
If theories don’t compel you, then there is always advanced mathematics.
Fibonacci Sequences have been used in technical trading since the advent of computerized logarithmic charts.
They are generally used to help predict reversal points in price action and the golden ratio is a favorite of many technical traders.
While I’m decent at math, complex mathematics is not my strong suit. I leave that to traders I trust like CoinsKid and Alessio Restani.
Speaking of the latter, he explains how the golden ratio is signalling a bullish trend for BTC this year and also claims another ratio will potentially send Bitcoin to $77,000 this year.
For the full video on the ratio’s predictions, watch here.
CONCLUSION
While these reasons are certainly compelling, it’s important to remember that a confluence of factors is required for a bull market to emerge.
While a bull market has become more likely, the chances of a sustained bear market remain high. Proceed with caution.
While I am an investor in crypto and equities, this is not to be taken as investment advice.
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