Crypto analyst TechDev (@TechDev_52) recently shared a detailed chart analysis that suggests Bitcoin may be on the cusp of its biggest breakout yet. This analysis, supported by historical patterns and technical indicators, points to a potential shift in the market that could lead to unprecedented price levels for Bitcoin.
The graphic provided by TechDev illustrates Bitcoin’s price action in USD alongside its price versus M1 money supply (BTC/M1). Historically, Bitcoin has exhibited several phases of parabolic price increases, known as blowoff tops, followed by sharp corrections. These blow-off peaks are marked with green check marks on the map and occurred in 2011, 2013 and 2017. Each of these peaks was followed by significant corrections.
It is striking that the 2021 peak did not result in a blow-off top, as indicated by the red cross on the map. This deviation from historical patterns is significant because it suggests a possible change in market behavior.
TechDev’s chart also highlights an important pattern known as the “descending rectangular broadening formation.” This technical pattern is characterized by a series of lower highs and lower lows, creating a broader wedge shape. The pattern generally indicates a period of consolidation, during which price fluctuates within the widening trend lines before a decisive breakout occurs. The chart shows that Bitcoin has recently broken out of this widening wedge, indicating a possible shift from a consolidation phase to a new bullish trend.
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The analyst noted: “Important. Bitcoin has only seen breakout after breakout against the M1 money supply. And the longer it is consolidated, the longer it is executed. This breakout follows the longest consolidation to date. In fact, it represents a breakout from a widening five-year wedge. The last five years have been corrective to M1. BTC is again impulsively against it for the first time since 2017. We have never seen a Bitcoin outbreak like this.”
Bitcoin could surpass the 2021 cycle
Another crucial aspect of TechDev’s analysis is Bitcoin’s breakout against the M1 money supply. The M1 money supply includes physical currency and checkable deposits, which represent the most liquid forms of money in the economy. TechDev points out that Bitcoin has broken out against M1 for the first time since March 2017. This breakout is particularly important because it suggests that Bitcoin’s recent price increase is driven by intrinsic demand and not simply an increase in the money supply.
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TechDev comments on this breakout, saying: “You’re looking at Bitcoin’s first breakout relative to the M1 money supply since March 2017, when it historically went parabolic for 9 months. Comparisons and trend projections regarding 2021 can lead to things being dramatically underestimated. One interpretation: In 2021, BTC was driven to new USD highs by the increased money supply. In 2024 it came there at its own request (and thus broke out against M1). Add expected M1 growth this time and we are likely to see BTC partially exceed expectations based on 2021.”
TechDev’s analysis underlines the importance of understanding Bitcoin’s performance in relation to macroeconomic indicators such as the M1 money supply. By breaking out against M1, Bitcoin is showing strong intrinsic demand, which is a bullish signal for future price movements. The historical patterns of breakout stops following similar breakouts suggest that Bitcoin could be entering a new phase of price discovery, potentially leading to new all-time highs.
At the time of writing, BTC was trading at $69,032.
Featured image created with DALL·E, chart from TradingView.com