With Bitcoin in the midst of one of its biggest rallies ever, everyone is asking if the $90,000 milestone is attainable. MetaBlock X explores the reasons behind this rally. That includes celebrating the halving anniversary, USD weakness, rising institutional demand and taking a technical analysis of indicators and the market sentiment.

The Halving Effect: A Historical Catalyst

One of the key catalysts fueling Bitcoin’s recent bull run is the halving. The Bitcoin halving occurs about every four years. This event reduces the rate at which new bitcoins are generated and brought into circulation by 50% within a single day! All else equal, this reduction in supply has a bullish impact on price, as it further codifies Bitcoin’s deflationary design. In past cycles, halvings have been among the most important catalysts to ignite multi-year bullish cycles in the crypto market. The recent rally is being viewed by many as a sign that this trend is reversing.

The effects of each halving event are becoming more muted. This is due to the fact that as each new supply is relative to existing supply diminishes with each successive halving. The next halving is expected in 2028, after which the block reward will drop to 1.625 BTC. The final satoshi will indeed be awarded just before the last halving, which is estimated to happen around the middle of 2140.

USD Weakness: A TailWind for Bitcoin

Another factor has been the weakness of the United States Dollar (USD) which has pushed Bitcoin’s price upward in recent weeks. The US Dollar Index (DXY) has lost more than 1%, falling to levels not seen since March of 2022. This decline has resulted in higher volatility in the market. A declining dollar increases the allure of other wealth preservation assets such as Bitcoin and gold.

Bitcoin is finally beginning to follow gold’s flight to macro uncertainty. Months of Bitcoin’s downtrend looked like a confirmation of that narrative – now the narrative is turning full circle back toward gold’s favor. Both of these assets are sending strong signals to investors that a weaker USD and higher global uncertainty are coming.

Institutional Demand: Fueling the Fire

Increasing institutional adoption in Bitcoin is another key factor that can help push BTC’s price to $700k. A mere strategic allocation of 2-5% into Bitcoin from institutional portfolios would send the price to all-time highs. Firms such as Brevan Howard Digital and Nickel Digital Asset Management have already announced double-digit returns.

Investment advisors are proving to be key collaborators in this growth. Recent data shows unprecedented increases in the number of registered investment advisors, hedge funds, and banks with Bitcoin on their balance sheets. This spike in institutional participation reflects a broader trend toward the acceptance of Bitcoin as an asset class. Investment advisors led the expansion, growing 48.2% from 278 to 412 holders, while hedge funds rose 64.7% to 56 holders, and banks increased 61.1% to 29 holders. Investment advisors were the main force behind this expansion, increasing their number by 27.6% to 1,340 holders. At the same time, hedge funds saw an astounding 31.5% increase, bringing their total to 188 high-flying holders.

Technical Indicators: Bullish or Bearish?

Analyzing key technical indicators is a surefire way to get a sense of how realistic our Bitcoin $90,000 price target really is. Here are some key indicators to watch:

  • Moving Averages (MAs): A Golden Cross, where a short-term MA moves above a long-term MA, can signal a bullish trend.
  • Awesome Oscillator (AO): A rising AO above zero can confirm sustained momentum and a potential uptrend.
  • Stochastic Oscillator: A value below 20 with a subsequent rise can indicate a buying opportunity.
  • Relative Strength Index (RSI): A value below 30 can suggest that Bitcoin is oversold, potentially signaling an upcoming price increase.
  • Fibonacci Pivot Points: A move above 80 followed by a decline can signal a potential sell, but if the price breaks above the resistance level, it can be a bullish sign.

Another gauge of market sentiment is the Fear and Greed Index. In fact, extreme greed is usually an indicator that a market correction is on the way, and extreme fear can be a great buying opportunity. Keeping an eye on this index goes a long way in furnishing important context for understanding what’s happening with prices.

The factors we’ve outlined thus far create a very bullish backdrop for Bitcoin. Remember, the cryptocurrency market can be very volatile. Even unexpected events, regulatory changes, or a change in market sentiment can weigh heavily on price. Investors must do their own due diligence and use caution when investing.

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