Review
In our last analysis on September 22nd, we suggested that Bitcoin and the entire crypto sector might need a bit more time. Indeed, Bitcoin briefly slipped below the psychological mark of $60,000 on October 10th, only to shoot up significantly the next day. This final bear trap marked the definitive trend reversal, which had already begun with the crash low of $49,130 on August 5th.
At the latest with Donald Trump’s election victory, it’s clear that the breakout rally for Bitcoin has begun. A new all-time high of $79,780 has already been recorded. The strong resistance zone between $72,000 and $76,000 has thus been breached. Above $80,000, the real fireworks should begin, rapidly propelling Bitcoin prices towards the psychological magnet of $100,000.
Overall, the seasonal pattern has worked wonderfully again this year, providing patient investors with good entry points between $50,000 and $54,000 during the summer months as expected.
Technical Analysis for Bitcoin in US-Dollar
Weekly Chart: Breakout from the three-year Cup-and-Handle pattern
Since the crash low on August 5th at $49,130, Bitcoin has risen by an impressive 60.92% over the last fourteen weeks. The all-time high of $73,794 from March 14th was surpassed last week without much resistance. Thus, Bitcoin has overcome the bears’ major resistance zone.
However, the rise has cost strength, resulting in a slightly overbought weekly stochastic. It would therefore be important now for the bulls to maintain buying pressure and leave the slanted resistance zone behind. Within the superordinate upward trend channel, there is still room up to about $82,000 in the every short-term.
In summary, the weekly chart is bullish. The upper weekly Bollinger Band ($74,741) is currently being bent upwards. The price target from the handle is around $100,000 and could possibly be reached even by the end of the year. Beyond that, the second price target from the cup of the cup-and-handle formation awaits at about $130,000.
Daily Chart: Small Bull Trap Before the Explosion??
On the daily chart, Bitcoin has also surpassed all known resistances, and the breakout has gained further momentum in recent days. However, it might need a short breather similar to December 2020, when the breakout was already in full swing, but all weak hands were shaken out with a small bull trap of about -11.8% just before the price explosion. Analogously, a pullback/dip to around $72,000 to a maximum of $68,000 could still be conceivable at present. We don’t see Bitcoin falling much lower than that. Rather, such a potential shake-out could represent the very last buying opportunity before the run to $100,000+x.
Overall, the daily chart is bullish, but also overbought. Should the bulls run out of steam in the short term, a small pullback (dip) towards $72,000 to 68,000 would not be surprising. However, we don’t see Bitcoin falling below $68,000 or below the rapidly rising 50-day line ($66,837). Every pullback is a buying opportunity.
Bitcoin Sentiment – Euphoric Mood
The “Crypto Fear & Greed Index” currently stands at 75 out of 100 points, indicating a very optimistic or even euphoric sentiment among investors. In fact, such a high value in the “greed” area suggests a potential short-term overheating of the market. Therefore, a quick cold shower might be needed before the rally can continue.
The “CMC Crypto Fear & Greed Index” from CoinMarketCap comes to a similar conclusion.
Overall, the sentiment is significantly overheated or euphoric after the strong rally of the last few days or the last three months. For the further rally towards $100,000 and higher to stand on a solid foundation, a small bull trap or a pullback towards USD 68,000 to 72,000 would be exactly the right recipe to create enough skepticism among market participants again.
Bitcoin Seasonality – Positive Seasonality Until Year-End
Bitcoin has also followed the seasonal patterns exemplarily this year. Since the new all-time high in March, prices corrected and reached an important low point just below $50,000 in early August as expected. After a tough bottoming phase in August and September, the trend finally turned upward in mid-October. Until the end of the year, the seasonal pattern supports price development and suggests further increases.
In summary, the seasonal component is bullish for Bitcoin until the end of the year.
Sound Money: Bitcoin vs. Gold, Bitcoin – The Breakout Rally Has Begun
At prices of around $79,400 for one Bitcoin and about $2,684 for one troy ounce of gold, you currently have to pay about 28.6 ounces of gold for one Bitcoin. Conversely, one troy ounce of gold currently costs about 0.034 Bitcoin.
With a double bottom on August 5th and September 6th in the area around 21.5, the Bitcoin/Gold-ratio has found the end of its correction after almost six months. Consequently, Bitcoin has clearly outperformed the strong gold price in the last two months. However, it’s still a good way off from the year’s highs in the area around 34. As the gold price has probably entered a multi-week breather, a rise in the ratio to at least 32 would be very realistic.
In sum, the Bitcoin/Gold-ratio provides a buy signal for Bitcoin against gold. Nevertheless, it is still advisable to own both gold and Bitcoin, as opposites complement each other. In our dualistic world, characterized by yin and yang, body and mind, up and down, warm and cold, etc., we are bound to the natural attraction of opposites. In this sense, gold and Bitcoin can be viewed as such a power couple. With the physical scarcity of gold and the digital scarcity of Bitcoin, you have a complementary unit of hard assets that will serve as true stores of value in the 21st century. It is advisable to have both in your portfolio!
Macro (BCBA:BMAm) Update – Trump, the “Bitcoin President”
While the melt-up in US stock markets has further accelerated due to Donald Trump’s election, in Germany, the failed Chancellor without a majority is struggling to set a date for new elections. Although the misery of the “traffic light coalition” is finally over, a new start for Germany is (still) not in sight. At the same time, the EU, the German federal government, and especially the German mainstream media have once again completely misjudged the situation and thus the election outcome in the USA. In the run-up, they supported only the US Democratic camp far too one-sidedly. Particularly in Germany, Kamala Harris was made out to be much stronger than she actually was.
Accordingly, European stock markets are finding it difficult to follow the strong lead from the USA. Instead, mass layoffs and corporate bankruptcies in the automotive industry and its suppliers dominate German headlines. Other large corporations such as BASF, SAP, Thyssenkrupp, Covestro, Evonik, and Miele have also announced large-scale job cuts. This points to an industry-wide economic crisis! The German labor market faces enormous challenges, which will sooner or later lead to further escapades at the printing press.
Fittingly, the cash-strapped Free State of Saxony threw around 50,000 confiscated Bitcoins onto the market in the summer at an average selling price of EUR 52,944 per Bitcoin (currently EUR 70,860) for a total revenue of EUR 2.64 billion. Just a few weeks later, Donald Trump promised a national US Bitcoin reserve in the event of his election victory.
Trump, the “Bitcoin President”
In contrast to Harris and Biden, Donald Trump positioned himself as the “Bitcoin President” and crypto-friendly candidate during the 2024 campaign, leading to a positive mood in the crypto community and an increase in the Bitcoin price.
Here are the main reasons why Trump is perceived as the “Bitcoin President”:
- Crypto-friendly rhetoric: Trump announced that he wanted to “make America the world capital for crypto and Bitcoin” and promised to be “the pro-innovation and pro-Bitcoin president that America needs”.
- Regulatory easing: Trump promised deregulation and more business-friendly guidelines for the crypto industry.
- Personnel changes: He promised to dismiss SEC chief Gary Gensler, who is considered crypto-critical, and replace him with a more crypto-friendly person.
- National Bitcoin Reserve: Trump announced the creation of a strategic national Bitcoin reserve, similar to existing reserves for gold and oil.
- Promotion of Bitcoin mining: Trump plans to expand energy production to promote Bitcoin mining in the USA.
- Crypto advisory board: Trump promised to install a Bitcoin and crypto advisory board in the White House to develop clear regulatory guidelines.
- Additionally, during his campaign, Trump promised to pardon Ross Ulbricht, the founder of the online platform “Silk Road”. Ulbricht’s case has attracted a lot of attention in libertarian and crypto-friendly circles in recent years. Trump had courted these groups during the campaign.
All these factors have led to Trump being perceived as the “Bitcoin President” and the crypto community having high expectations for his presidency. Bitcoin rose significantly to a new all-time high of over $77,000 after Trump’s election victory, which was interpreted as a reaction to his crypto-friendly stance. However, it remains to be seen how many of his promises will actually be implemented and what long-term effects they will have on the crypto market. Trump’s economic policy, which aims at deregulation and tax cuts, could in any case stimulate US economic growth and thus reduce the attractiveness of crisis currencies such as gold.
US Debt Crisis Looms: Trump’s Fiscal Policy May Accelerate America’s Path to Bankruptcy
However, the escalating debt problems of the Western world, and especially America, remain a central issue that Mr. Trump will not be able to solve either. An expansive fiscal policy, as expected under Trump, is likely to drive US national debt and inflation even higher. In the first three weeks of October alone, US national debt rose by another USD 473 billion. Converted, every American is now USD 103,700 in debt. This is unsustainable. America is on the fast track to bankruptcy.
Both gold and Bitcoin should benefit from this, as the combination of high national debt and potential inflation creates an environment in which alternative assets are increasingly gaining importance as a store of value.
Bitcoin Poised to Outshine Gold as ETFs Fuel Institutional Investment Surge
In the short- to midterm, however, we suspect a regime change. After the strongly rising gold price has overshadowed all other asset classes in recent months, Bitcoin is likely to take the helm again. Thanks to Bitcoin ETFs, large capital from institutional investors can flow into Bitcoin at any time. This distinguishes the current Bitcoin cycle from previous ones. After just ten months, Blackrock’s iShares Bitcoin Trust (NASDAQ:IBIT), with $33.2 trillion in assets under management, is already larger than Blackrock’s iShares Gold Trust (NYSE:IAU). This trend is likely to intensify.
Conclusion: Bitcoin – The Breakout Rally Has Begun
After the US election and the meteoric rise to a new all-time high of $77,780, Bitcoin seems to have run a bit hot in the very short term. The technical indicators at least urge a bit of caution, while sentiment has reached the realm of extreme greed. A tactical pullback to around $68,000 to $72,000 could not only represent a healthy market correction but also offer a final chance for latecomers before Bitcoin potentially advances into previously unexplored price territory.
In the big picture, the breakout from the three-year cup-and-handle pattern signals fundamental strength that extends far beyond short-term price fluctuations. Our next price targets of $100,000 and $130,000 could be reached by spring 2025.