Bitcoin appears to be emerging from a period of post-halving weakness, according to crypto analyst Rekt Capital, who points to historical data to support his claim.
Danger Zone Averted?
On May 13th, Rekt Capital updated his Bitcoin market cycle chart, indicating that the asset has likely navigated the “danger zone” – a period of correction that typically follows a halving event. This positive development is further bolstered by Bitcoin’s “good bounce” off recent lows, suggesting a return to a reaccumulation phase.
The concept of pre and post-halving danger zones stems from historical market cycles where Bitcoin’s price dips on either side of the halving, a programmed event that reduces the number of new coins minted. In the current cycle, Bitcoin experienced a 23% drop from its peak in mid-March, potentially reaching its post-halving danger zone low at $56,800 on May 1st.
A Look Back Informs the Future
Rekt Capital highlights that if $56,000 wasn’t the absolute bottom, the recent pullback would mark the longest retracement in this cycle at 63 days. However, based on historical trends, the analyst suggests the pullback likely concluded at $56,000 and lasted 47 days.
Bitcoin’s current price recovery above $63,000 aligns with the reaccumulation zone analysis. It’s important to remember that past performance doesn’t guarantee future results. Potential for further pullbacks during the sideways trading period that often follows a halving still exists.
Analyst Remains Bullish on Support Levels
Despite the possibility of short-term volatility, Rekt Capital expresses confidence in current support levels holding firm. He points to Bitcoin’s “slowing down in its sell-side momentum” and the development of a “curl against the ~$60,000 support” as encouraging signs. Maintaining this support is crucial for a potential price increase towards $68,000.
Other market players like Raoul Pal, founder of Global Macro Investor, offer broader perspectives. Pal anticipates a period of “Macro Summer and Fall” driven by the global liquidity cycle. He suggests that crypto could perform particularly well during a “banana zone” in the latter half of the year, a period characterized by significant price surges for riskier assets.
A Period of Accumulation Before Takeoff?
This sentiment aligns with the views of Arthur Hayes, former CEO of BitMEX. Hayes predicts a period of sideways trading and accumulation before a market upswing later in 2024. He also anticipates potential injections of liquidity from Federal Reserve monetary policy potentially flowing into riskier assets like cryptocurrencies.
Also Read: BRICS Go Rogue: US Dollar on Notice as India & Nigeria Ditch It for Local Trade – Boon for Bitcoin?
While Bitcoin appears to be leaving the post-halving danger zone behind, investors should approach the market with a balanced perspective. While historical trends offer valuable insights, short-term volatility remains a possibility. Long-term prospects, however, seem promising, with market experts anticipating a period of accumulation followed by potential price increases later in the year.
About The Author
