Bitcoin Briefly Rallies, But Is the Bear Market Looming?Despite a surge in Bitcoin on Thursday, it was merely a brief rebound in an otherwise bleak year. While investors have a number of ostensibly positive developments from a fundamental standpoint, Bitcoins chart is showing a worrisome trend
Bitcoin Briefly Rallies, But Is the Bear Market Looming?
Despite a surge in Bitcoin on Thursday, it was merely a brief rebound in an otherwise bleak year. While investors have a number of ostensibly positive developments from a fundamental standpoint, Bitcoins chart is showing a worrisome trend. The flagship cryptocurrency has been in a slump since hitting an all-time high above $73,000 six months ago, consistently making lower highs.
The external environment has not been poor for Bitcoin during this period. The stock market continues to surge to new highs, both US presidential candidates have made positive remarks about cryptocurrencies, and the Fed just lowered interest rates. However, these factors have not been reflected in the price of Bitcoin.
If you had told us in March that the S&P 500 would be above 5,700, we would have thought Bitcoin would be near $100,000, said Rob Ginsberg, a strategist at Wolfe Research, in a Wednesday report. But its actually the opposite... Its fair to say that while the market has climbed to new highs, crypto has been in a bear market since March.
Bitcoin is down 13% since its all-time high on March 13, while Ethereum has dropped 34% in the same period. In contrast, the S&P 500 is up 11% over the same period, while gold is up 22%.
Despite the fact that Bitcoin is up 50% this year, it is considered to be in a bull market cycle since March 2023. The latest Bitcoin halving, which occurred in April, historically tends to see peaks about 18 months after the supply-reduction event. With the popularity of the Bitcoin ETF launched in January, the slowing of Bitcoin supply, and a host of other macro and micro catalysts, many traders are expecting a price surge.
However, Ginsberg is skeptical. Weve been talking about a defensive risk environment ad nauseam and this is just another indication of a lack of a willingness to invest in highly speculative assets, he said. Even with a favorable SEC ruling, institutional adoption, and now interest rate cuts, nothing seems to be enough to propel Bitcoin to the next higher level.
Of course, cryptocurrencies could still benefit from a seasonal upswing in the fourth quarter. October and November have historically been the best months for Bitcoin, with investors anticipating many uncertainties being resolved after the November election.
We continue to hold a bearish view on rallies until we see a significant breakout and a reversal of the downtrend, Ginsberg said.
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