Bitcoin price continues to consolidate within the trading range between $27,800 and $30,000. While the buy side seems to have lost momentum at the moment and the bears feel in control, there are plenty of good arguments as to why Bitcoin price will write new yearly highs in the near and medium term.
Bitcoin 4 hour chart
A look at Bitcoin’s 4-hour chart shows that the price has made higher lows since the price hit a low of $27,000 on April 24. A higher low occurs when the price hits a new low that is higher than the previous low, without a lower low preceding it.
Thus, the current price movement of BTC indicates an upward trend. The USD 30,000 level should be the next target as long as BTC remains above USD 28,800.
American banking crisis
Another driver for Bitcoin price in the short and medium term may be the ongoing US banking crisis. The past few weeks have shown that BTC has reacted strongly to the news and has seen an increase for the most part. Ultimately, Bitcoin was created specifically for this purpose: an escape from the fractional reserve banking system.
Because of this, it is also not surprising that Bitcoin has seen its highest correlation with gold in two years. Physical gold has reached new all-time highs in recent days, Bitcoin could be boosted by this.
The lead economist at $646 billion asset manager AllianceBernstein, Jared Bernstein, recently acknowledged that Bitcoin will establish itself as an alternative financial system in times of bank failure, urging people to buy Bitcoin.
Bernstein predicted that the US banking crisis is “far from over,” adding: “We believe Bitcoin will reemerge as a faster horse than gold.”
Fed Rate Break in June?
Although financial markets initially reacted bearish to Wednesday’s FOMC press conference, the market does not believe the US Federal Reserve (Fed) will raise rates again in June. In fact, the market is expecting a pivot, marking an initial pause in rate hikes on June 14.
The CME’s FedWatch tool shows that an overwhelming 99.1% currently expect a rate break in June. More than 85% expect the first rate cut as early as September and at least three rate cuts by the end of the year.
And even JP Morgan’s Davis believes that “this is definitely the end of the cycle of rate hikes for the Fed” and that a Fed pivot could come “as early as September.” Due to the credit crunch and banking woes, the Fed will be forced to pump liquidity into the market prematurely, BTC will benefit enormously.
Bitcoin will rise as history repeats itself
As Rekt Capital analysts write, Bitcoin price is currently in a similar consolidation phase as it was in 2019. If history repeats itself, BTC has yet to see its biggest gains in the coming months.
#BTC 2019 vs 2023
Different or similar?$BTC #crypto #Bitcoin pic.twitter.com/8CCmz224av
— Rekt Capital (@rektcapital) May 5, 2023
Featured image from iStock, chart from TradingView.com