Bitcoin looks to be making a case for a bullish comeback. This optimism is largely fueled by increasing liquidity brought on by the U.S. Treasury’s TGA drawdown and impact of the April halving. From a technical analysis perspective, there are important levels to monitor—with a move above $90,000 indicating that we’re back in bullish territory. This perfect storm of circumstances has created a rare wave of investor optimism. They are still watching Bitcoin’s price action carefully for signs of a continuation after confirming an upward trend.
The cryptocurrency space is currently abuzz with speculation. Bitcoin today finds itself in an uncertain environment shaped by macroeconomic conditions and its own unique characteristics. The Treasury General Account (TGA) drawdown is adding massive liquidity to the financial system, often a historical Bitcoin tailwind. At the same time, the decreased supply after the April halving is causing a supply-demand imbalance that would ideally put even more upward pressure on prices. In summary, market participants should continue to be cautiously optimistic while waiting for a clear break above strong resistance to signal the bullish price action is here.
Key Technical Levels to Watch
At the time of writing, bitcoin’s price is bouncing around in a consolidation rejection area. The lower boundary is located at $78,000, and the upper boundary is at $87,400. These levels have become important areas of support and resistance which traders are watching like a hawk. Such a breakout above $87,400 would immediately cut off any shorts, starting a buying spree that may very well send Bitcoin towards its next significant targets.
The crypto has struggled to break through multiple key resistances in the last few months. April lows at $74,500–$74,500 is first level of support. May/June highs at $72,000-$72,000 would be next support level. Additional resistance was met around $68,000 in July 2024. These intervals act as prospective challenges for Bitcoin as it makes an effort to escape from its ongoing consolidation formation.
$66,000 now stands as the October 2024 lows, giving it a key support floor. If Bitcoin was to break underneath this level, it can be a sign that the bearish pattern is about to proceed. As deep as Bitcoin fell today, if the price can stay above $66,000, the chance of a bullish reversal is still on the table.
The Impact of Treasury Liquidity
The U.S. Treasury's TGA drawdown is a significant factor influencing Bitcoin's price dynamics. In fact, Bitcoin has had a historic correlation of 0.85 with liquidity in the financial system. As the TGA balance gets run down, additional cash enters the market, which can help lift asset prices, Bitcoin included.
With the recent TGA balance recently dropping to $342 billion, that represents a huge jump in liquidity. Short-term, all this cash being injected into the economy could serve as a tailwind to Bitcoin, taking prices higher. Investors have diligently tracked the TGA balance as a leading indicator or guidepost to Bitcoin’s good future performance.
Boosting liquidity into the Treasury market makes more investment available for risk assets. This has a direct influence on Bitcoin’s price, making the Bitcoin and gold relationship even more evident. When more money pours into the system, investors scramble all over themselves to find good opportunities. They are more likely to invest in speculative assets such as Bitcoin which they believe have greater growth potential.
Halving and Supply Dynamics
Couple that with the April 2024 Bitcoin halving event and the bullish case for Bitcoin is even more compelling. The halving occurs roughly every four years. Second, it reduces the block reward for miners, cutting the supply of new Bitcoin entering the market. This time, the halving reduced mining rewards to 3.125 BTC.
If demand continues to be strong, or increases, the reduction in supply can create upward pressure on prices. That isn’t to say that the gap between Bitcoin’s halving and the next big price appreciation hasn’t already occurred. This pattern has caused most investors to expect the same outcome following the latest halving.
The halving's impact on supply dynamics is a fundamental driver of Bitcoin's long-term value proposition. The halving automatically cuts in half the rate at which new Bitcoin are created. This further cements the scarcity of Bitcoin, adding to its long-term values as an attractive store of wealth. This scarcity is an essential characteristic that sets Bitcoin apart from conventional fiat currencies.
Expert Opinions and Market Sentiment
Market analysts are now looking at Bitcoin’s price action with keen interest to predict when it will make its next breakout. Any advance above $90,000 would be a particularly strong technical development – even though it’s obviously a subjective and arbitrary level – reversing the medium-term bearish momentum. This level marks an important resistance area in late 2024, early 2025.
“If it plays out, a new ATH could be reached,” - Titan of Crypto
According to analyst Titan of Crypto, Bitcoin is on the verge of breaking out from a bull pennant on the daily chart. If history repeats itself, this pattern could lead to a new all-time high.
Bitcoin may meet additional headwinds at the $100,000 level, a natural psychological barrier and major resistance point. Further above, $102,300 caps the local highs that were tested in December and early January. The key long-term objective for Bitcoin bulls now stands at $108,000, the record peak hit in December 2024.
Though today a few analysts remain bullish on Bitcoin’s prospects, many are more cautious as global geopolitics and economic conditions continue to be fraught with uncertainty.
“There’s going to be decent volatility, a lot of trading opportunities,” - Kretov
According to Huobi Global M&A advisor, Arkadi Kretov, one feature of the current market is the lack of any uncertainty whatsoever. He cites rising geopolitical tensions, global economic fragility and a pervasive risk-off mood as the trifecta.
