4 reasons to be bullish on Bitcoin in the short and medium term

by James · May 5, 2023

The Bitcoin price continues to consolidate within the trading range between $27,800 and $30,000. Although the buy side currently seems to have lost momentum and the bears feel in control, there are many good arguments why the Bitcoin price will post new yearly highs in the short and medium term.

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4-hour chart of Bitcoin

A look at the 4-hour chart of Bitcoin shows that the price has been making higher lows since the price hit a low of $27,000 on April 24. A higher trough occurs when the price hits a new low that is higher than the previous low, without a lower low before it.

Thus, the current price movement of BTC indicates an uptrend. The $30,000 level should be the next target as long as BTC stays above $28,800.

BTC Makes Higher Lows, 4-Hour Chart l Source: BTCUSD on Tradingview.com

American banking crisis

Another driver of the Bitcoin price in the short to medium term could be the ongoing US banking crisis. The past few weeks have seen BTC react strongly to the news, mostly seeing an uptick. Ultimately, Bitcoin was created for this very 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 set new records in recent days, Bitcoin may be spurred by this.

The chief 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, and urged people to buy Bitcoin.

Bernstein predicted that the US banking crisis is “far from over”, adding: “We think Bitcoin will re-emerge as a faster horse than gold.”

Fed’s interest rate break in June?

Although the financial markets initially gave a bearish reaction to the FOMC press conference on Wednesday, the market does not believe that the US central bank (Fed) will raise interest rates again in June. The market is actually expecting a pivot, meaning an initial pause in interest rate hikes on June 14.

CME’s FedWatch tool shows that an overwhelming majority of 99.1% currently expect a rate cut in June. More than 85% expect the first interest rate cut already in September and at least three interest rate cuts by the end of the year.

And even JP Morgan’s Davis believes that “this is definitely the end of the rate hike cycle for the Fed” and a Fed pivot could come “as early as September.” Due to the credit crunch and banking problems, the Fed will be forced to pump liquidity into the market prematurely, BTC will benefit greatly.

Bitcoin will rise if history repeats itself

As the analysts at Rekt Capital write, the 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.