Several bullish signals for Bitcoin have just flashed, and we are back above $60K ($63,000 at the time of writing). Let’s talk about these signals and their implications.
Whale Purchases
First, whale purchases. When Bitcoin was dipping down into the mid-to-high $50k’s, whales were scooping up the dip, while “shrimps” (small investors) were capitulating and selling their Bitcoin. This contrast – whales buying and shrimps selling – is a famous sign of bullishness, as small investors often lose money while whales are often profitable.
In fact, whales displayed the most aggressive buying activity in more than a year, since Spring 2023.
The Wyckoff Accumulation Model
And this leads to the next bullish signal: The Wyckoff accumulation model. If you aren’t familiar, Wyckoff is a chart pattern that is well known in stocks and crypto, and is recognized to predict market moves and patterns. It is believed that whales and other smart investors use the patterns to predict market movements and make their trading decisions.
There are 5 different Wyckoff chart patterns, each corresponding to a different market phase. A few weeks ago I shared that our current situation very closely resembled the Wyckoff “Accumulation Phase,” which occurs when the market is chopping sideways and just before the market makes another leg up. I mentioned that if I was right, we would see a break to the upside soon; and in fact, we have. If this phase continues – as I believe it will – then Bitcoin could be on the verge of a large move up, probably into the high $70K’s.
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Worldwide Events
On a larger scale, many worldwide events and developments are also lining up to be bullish for Bitcoin, including the regulatory environment, the likely victory of Donald Trump according to the next U.S. President odds, and recent developments with ETFs.
As recently as late 2023, we were questioning whether the crypto industry as a whole could even survive. Now we have approved Bitcoin ETFs, ETH ETFs very close to approval, and even applications for new Solana ETFs. The remarkable thing about ETH & SOL ETFs is that they endorse the utility of crypto, not just using it for a store of value! This endorsement for utility sets a completely different tone and environment than what we’ve seen in the past.
Recession
Lastly, there’s another interesting event on the horizon that could have a substantial impact on the crypto market: inflation is indeed cooling off, and the market is now pricing in several rate cuts before the end of the year. How would this impact crypto? Well, there are mixed forces at play here. Historically, the first rate cut signals a recession. This precedent has been repeated almost EVERY time throughout history – rate cuts followed by recession. However, the opposing force here is that rate cuts also provide more liquidity to the market, and I believe that liquidity could flow into crypto because the public knows that we are in the middle of a bull run crypto cycle. So, I tend to be more bullish than bearish on rate cuts.
Very exciting times in crypto, and many new bullish catalysts to look at. Let’s keep an eye on the market and I’ll be back next week with a new article.
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