Bitcoin may have reached its bottom at $53,000. This article explores five bullish indicators suggesting a potential rebound for Bitcoin.
Points
- Bullish divergence on technical charts.
- Oversold RSI indicating potential consolidation or recovery.
- Wall Street’s interest in a September rate cut.
- Increased Bitcoin ETF inflows.
- Expanding U.S. money supply.
Bitcoin’s recent price drop to $53,000 might have marked the bottom, with several bullish indicators suggesting a potential rebound.
Bullish Divergence Boosts BTC Rebound Prospects
In technical analysis, bullish divergence often indicates a potential reversal or slowdown in the current downtrend. This suggests that Bitcoin might soon experience a rebound as market sentiment shifts back toward bullishness.
Bullish Hammer and Oversold RSI
Bitcoin’s daily RSI reading is hovering near its oversold threshold of 30, often preceding a consolidation or recovery period. Analyst Jacob Canfield predicts that this indicator could signal a rebound, with BTC potentially returning to its former range high of over $70,000.
https://x.com/JacobCanfield/status/1809684515658637380
Wall Street Bets on September Rate Cut Rise
Bitcoin’s ability to resume its bull run in the coming weeks is bolstered by rising interest rate cut probabilities in September. When the job market weakens, the Fed often considers cutting interest rates to stimulate economic activity. Lower interest rates are generally bullish for Bitcoin and other riskier assets because they make traditional safe investments like U.S. Treasury notes less attractive.
Target rate probabilities for Sep. 18, 2024 Fed meeting. Source: CME
Bitcoin ETF Investors Return After July Decline
Bitcoin ETF inflows have resumed after a July decline, suggesting renewed investor interest. The Fidelity Wise Origin Bitcoin Fund （FBTC） spearheaded the inflows with $117 million. The Bitwise Bitcoin ETF （BITB） saw a net inflow of $30.2 million, and the ARK 21Shares Bitcoin ETF （ARKB）, along with the VanEck Bitcoin Trust （HODL）, recorded inflows of $11.3 million and $12.8 million, respectively. In contrast, the Grayscale Bitcoin Trust （GBTC） experienced a net outflow of $28.6 million.
Spot Bitcoin ETF cumulative inflows. Source: Farside Investors
U.S. Money Supply is Expanding Again
More upside cues for Bitcoin come from a recent rise in the U.S. M2 supply, a measure of the money supply that includes cash, checking deposits, and easily convertible near-money such as saving deposits, money market securities, and other time deposits. As of May 2024, the M2 money supply increased by approximately 0.82% year over year, reducing its aggregate drop from the peak decline of 4.74% in October 2023 to around 3.50%.
U.S. M2 supply chart. Source: FRED
M2 supply growth is bullish for Bitcoin because it increases liquidity in the economy. More money in circulation leads to higher investments in riskier assets like Bitcoin, as traditional investments like savings and bonds offer lower returns.
Bitcoin Miner Capitulation Hints at BTC Price Bottom
Bitcoin miner capitulation metrics are nearing levels seen during the market bottom following the FTX crash in late 2022, indicating a potential bottom for BTC. Miner capitulation occurs when miners reduce operations or sell part of their mined Bitcoin and reserves to stay afloat, earn yield, or hedge against Bitcoin exposure.
Bitcoin network true hashrate drawdown. Source: CryptoQuant
As weaker miners exit the market or scale back operations, the more competitive miners will see bigger profits, potentially stabilizing their operations and reducing the need to sell BTC. These metrics signal that the Bitcoin market might be nearing its bottom, similar to previous cycles where miner sell-offs and operational reductions preceded market recoveries.
Conclusion
These bullish indicators suggest that Bitcoin might have found its bottom at $53,000. While technical analysis and on-chain data point to a potential rebound, investors should remain cautious and consider multiple factors before making investment decisions.
解説
- Bullish Divergence: Indicates potential reversal or slowdown in the downtrend, suggesting a possible rebound.
- Oversold RSI: Near the threshold of 30, often preceding consolidation or recovery.
- Rate Cuts: Lower interest rates are bullish for Bitcoin as they make traditional investments less attractive.
- ETF Inflows: Renewed interest in Bitcoin ETFs indicates positive investor sentiment.
- Money Supply: Increased liquidity in the economy is bullish for Bitcoin, leading to higher investments.
- Miner Capitulation: Indicates potential market bottom as weaker miners exit and competitive miners stabilize operations.