Bitcoin is set to extend its 70% rise this year if key charts are correct

by James · March 21, 2023

(Bloomberg) — Bitcoin is on pace for a quarterly gain bigger than any since the start of 2021, the year it hit an all-time high.

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Some analysts argue that the token is seen as a hedge against the woes of the US and European banking sector and is taking advantage of expectations of looser monetary policy to cushion economies from the fallout of those problems.

“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 resurgence has helped the digital asset market rise in value to around $390 billion by 2023 after a $1.5 trillion rout last year. The rebound has overcome crypto bankruptcies, a US regulatory crackdown and the temporary decoupling of a key stablecoin meant to maintain a constant $1 value.

The rally has stalled this week, leaving the token near $28,000 as traders wait for the latest Federal Reserve policy decision. Key charts suggest that any hiatus or pullback is likely to be 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 helped crypto and gold, Chris Weston , head of research at Pepperstone Group Ltd., wrote in a note.

Towards $35,000?

Bitcoin has been tracking an inverted head-and-shoulders, a pattern that is often seen as bullish. The technical study indicates a price target of around $35,000. “With fixed income markets moving 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

Bitcoin has jumped into an area characterized by a weekly Ichimoku cloud, an indicator that uses mathematical formulas to define levels of resistance and support. The break in the cloud signals the potential for further increases. The token could “ride on the narrative as a systemic hedge” and draw support from central banks forced to inject liquidity to cope with banking sector fluctuations, Bendik Schei, head of research at K33, wrote in a note.

Temporary withdrawal

The DeMARK Sequential indicator – a method of analyzing price momentum that tries to predict 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 heralds a pullback, according to the analysis. DeMARK indicators support a neutral short-term bias, but other chart patterns could soon point to a “longer-term breakout,” Katie Stockton, founder of Fairlead Strategies LLC, wrote in a note.