Bitcoin set to extend its 70% surge this year if key charts are right

Bitcoin is hurtling toward a quarterly gain bigger than any since the start of 2021, the year when it went on to hit a record high.

Some analysts argue the token is being viewed as a hedge against the woes in the US and European banking sectors and benefiting from expectations of looser monetary policy to cushion economies from the fallout of those troubles.

“The behavior of the price through this crisis is going to attract more institutions,” Ark Investment Management’s Cathie Wood said on Bloomberg Television, referring to the unraveling of three US lenders and the emergency takeover of Credit Suisse Group AG by rival UBS Group AG.

Bitcoin’s revival has helped the digital-asset market add about $390 billion in value in 2023 after a $1.5 trillion rout last year. The rebound has weathered crypto bankruptcies, a US regulatory crackdown and the temporary de-peg of a key stablecoin that’s meant to hold a constant $1 value.

The rally has paused this week, leaving the token near $28,000 as traders await the latest Federal Reserve policy decision. Key charts suggest any hiatus or pullback is likely a temporary speed bump on the way to further gains.

Quarter to Remember

Bitcoin is up 70% since the start of 2023. A $300 billion increase in the Federal Reserve’s balance sheet last week — part of efforts to support liquidity in the US banking sector — is positive for risk assets and has aided crypto and gold, Chris Weston, head of research at Pepperstone Group Ltd., wrote in a note.

Toward $35,000?

Bitcoin has traced a reverse head-and-shoulders, a pattern often viewed as bullish. The technical study indicates a price objective of about
$35,000. “With interest-rate markets gone from pricing in rate hikes to pricing in rate cuts, there is now a gentle tailwind supporting Bitcoin,” Tony Sycamore, market analyst at IG Australia Pty, wrote in a note.

In the Clouds

Temporary Pullback

The DeMARK Sequential indicator — a method of analyzing price momentum that tries to anticipate when a market trend has run its course — is flashing red. The study uses a system of counting applied to chart patterns and has printed a 9 count that likely presages a pullback, according to the analysis. DeMARK indicators support a neutral short-term bias but other chart patterns could soon point to a “long-term breakout,” Katie Stockton, founder of Fairlead Strategies LLC, wrote in a note.