Technical Talk: Bitcoin Flashes a Buy Signal

Will aggressive interest-rate cuts prompt an inflation spike? It’s possible, so I hope you have some inflation-resistant assets in your portfolio. Gold is great for this purpose, but it’s also not a bad idea to buy some Bitcoin if you don’t already have some.

You may have heard that consumer sentiment hit a multi-month high in September, so there’s a risk-on feeling in the air. This should provide a tailwind for the Bitcoin price in the coming weeks.

And while Donald Trump has expressed his enthusiastic support for Bitcoin, you don’t have to take any particular political position to be pro-crypto in 2024. To quote Steven Lubka of Swan Bitcoin, “Bitcoin has always been an investment that is rooted more in the fiscal and monetary profile of countries, sovereigns and the United States,” Lubka added. “Neither candidate changes that.”

That’s a fair assessment, and Lubka also posits that Bitcoin will soon reach $100,000 irrespective of who wins the presidential election. “Do I think we’ll be in the six figures by 2025? Almost certainly. Do I think we’ll be in the six figures regardless of who wins? Almost certainly,” Lubka asserted.

Modified Bitcoin chart. Original chart courtesy of Yahoo Finance

Then, there are the technical considerations. The five-year Bitcoin price chart shown above suggests that a bullish cup-and-handle pattern may be in progress right now. If so, then the next likely move would be to $75,000.

Bear in mind, technical chart patterns like the cup and handle don’t always pan out like they do in textbooks. Nonetheless, they’re helpful in weighing the probabilities in conjunction with the fundamental data.

Modified Bitcoin chart. Original chart courtesy of Yahoo Finance

There’s also a bull flag pattern forming for Bitcoin. This indicates that the buyers are just taking a breather and could soon rush back into the cryptocurrency market with a flood of buy orders.

Interestingly, Bitcoin miners haven’t had a great year in 2024 so far despite the fact that Bitcoin is up significantly year-to-date. The Bitcoin halving event from April is certainly a factor here, but Bitcoin miners are also busy upgrading their equipment, which can take a toll on their bottom lines.

This doesn’t mean you can’t take small share positions in cryptocurrency mining businesses. What’s important is to conduct your full due diligence and don’t overload your portfolio, as these are speculative investments.

The same thing could be said about Bitcoin itself, but there’s somewhat less risk involved since Bitcoin’s adoption is growing rapidly. After all, BlackRock is a financial giant and wouldn’t just casually create a spot Bitcoin ETF without doing deep research first.

Courtesy: @Vivek4real_

The endorsement of established financial institutions like BlackRock signals an accelerating adoption curve for Bitcoin. It’s reminiscent of the internet a quarter-century ago, before modern social media, smartphones, and apps even existed.

But don’t just take my word for it; use the data as your guide. Notably, Bitcoin has outperformed Treasury bonds and the stock market in all but three years since 2012.

This has occurred despite a sometimes hostile regulatory environment created by Securities and Exchange Commission (SEC) Chairman Gary Gensler, as well as by the Chinese government. As Lubka explained, “Governments have traditionally been at least mildly hostile to Bitcoin during its whole history, and it’s done extremely well.”

Thus, the technical chart patterns for Bitcoin only enhance an already powerful bullish argument. Use the charts judiciously, and don’t be too surprised when Bitcoin at $75,000 and higher is a foregone conclusion.