As we kick off a new month, Bitcoin (BTC) enthusiasts are feeling bullish. The world’s largest cryptocurrency by market cap has been on a roll in recent weeks, with a sustained rally that has seen it break through several key resistance levels. But is this momentum sustainable, or are we due for a correction? Let’s take a closer look.
First things first: BTC is well-positioned for a new macro uptrend over the mid- to long-term. After successfully breaking beyond the macro downtrend that had been in place since the all-time high in late 2017, BTC has been building momentum. This is largely thanks to a confluence of factors, including increased institutional adoption, growing interest from retail investors, and a broader macroeconomic environment that is supportive of alternative assets like cryptocurrencies.
But the question on everyone’s mind is what happens next. Do we get a 2015-like retest, or do we continue moving upwards like in 2019?
— Rekt Capital (@rektcapital) May 1, 2023
For those who don’t remember, 2015 was a tough year for BTC. After reaching an all-time high in late 2013, the cryptocurrency entered a bear market that lasted for more than a year. It wasn’t until mid-2016 that BTC started to rebound in a sustained way. But before that happened, there was a major retest of the previous low, which shook out many weak hands and set the stage for the next leg of the bull market.
So, could we see something similar happen now? There are certainly some similarities between the current market and the one in 2015. For one thing, there was a prolonged period of consolidation and sideways trading leading up to the break-out in both cases. This was followed by a strong move up that brought us to new highs.
But there are also some key differences. For one thing, the current rally has been much stronger and more sustained than the one in 2015. It has also been driven by a different set of factors, including increased institutional adoption and growing mainstream acceptance of BTC as a legitimate investment.
Another factor to consider is the role of the halving cycle. As we’ve discussed before, the halving – which occurs roughly every four years and cuts the reward for BTC miners in half – has historically been a major driver of BTC price action. The last halving occurred in May 2020, and we are now approaching the one-year anniversary of that event. Historically, we have seen a sustained rally in the year or so following each halving. So, in that sense, the current rally is following a fairly predictable pattern.
Of course, none of this is to say that we are guaranteed to avoid a major correction. BTC remains a highly volatile asset, and there are plenty of factors that could cause the price to drop sharply in the short term. But looking at the macro picture, it’s clear that BTC is in a much stronger position than it was just a few years ago.
So, what should investors do? As always, it’s important to maintain a long-term perspective and avoid getting too caught up in short-term price movements. Dollar-cost averaging is a good strategy for investors who are looking to build a position in BTC over time, as it helps to smooth out some of the volatility. It’s also important to remember that BTC is just one part of a diversified investment portfolio, and that it should never be the sole focus of your investing strategy.
In conclusion, we are starting a new month with the same BTC outlook – a sustained rally that has the potential to continue over the mid- to long-term. While a 2015-like retest is possible, there are also plenty of reasons to be optimistic about the future of BTC