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Bitcoin Forms Bull Flag Post Halving: How to Trade Potential Breakout

Published 04/24/2024, 05:26 AM
  • Despite the recent Bitcoin halving event, market reaction remains subdued, with Bitcoin consolidating within a narrow range.
  • Factors like limited supply, increased demand from Bitcoin ETFs, and a rise in long-term holders point towards a bullish outlook.
  • To spark a new rally, defending the $60,000 support level is crucial for Bitcoin bulls.
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  • The highly anticipated Bitcoin halving took place last weekend, slashing miner rewards from 6.25 BTC to 3.125 BTC per block. This naturally reduced the crypto's supply, and estimates suggest 94% of all Bitcoins have already been mined.

    Despite the halving event, the initial market reaction has been muted, with Bitcoin consolidating between $65,000 and $67,000. This could hint that the broader uptrend remains intact, for now.

    Several factors support this bullish outlook:

    • Limited Supply, Increased Demand: The finite supply created by the halving, combined with continued inflows into Bitcoin ETFs (particularly BlackRock) iShares Bitcoin Trust (NASDAQ:IBIT)) is expected to put upward pressure on demand.
    • Historical Behavior: Consolidation after a halving is typical. This time, however, the price surged to new highs even before the event, likely due to the launch of Bitcoin ETFs earlier this year. Impressive inflows – over 532,342 BTC ($35 billion) – have been recorded, with BlackRock (NYSE:BLK)'s product contributing roughly half.
    • Long-Term Holders on the Rise: Both Bitcoin and Ethereum are witnessing a decline in the percentage of tokens held on exchanges, suggesting less selling pressure and an increase in long-term investors.

    However, a hawkish Federal Reserve could act as a brake on the rally. The market currently expects the first interest rate cuts in September, but if disinflation slows, the Fed's pivot might be delayed until next year, potentially weighing on risk assets like Bitcoin. While the uptrend has decelerated since Q1 2024, there are no signs of a significant demand drop.

    Bitcoin's Bullish Charge Hinges on $60,000 Support

    The current price consolidation is forming a bull flag pattern, which typically signals a corrective phase following a strong upward move. This suggests the uptrend is likely to resume after the correction.

    For Bitcoin bulls to maintain control and propel prices higher, defending the crucial support level around $60,000 is paramount. A decisive breakout from the upper limit of the forming flat pattern would be a bullish signal, empowering bulls and potentially launching Bitcoin toward new historical highs.

    Ethereum's Correction: Where's the Bottom?

    Earlier this week, Ethereum bulls attempted to regain the $3,000 mark but fell short, failing to test the critical first major support level near $2,700. The question for Ethereum investors now is: how deep will this correction go?

    To resume the uptrend, breaking out of the supply zone around 3700 points is crucial. This breakout should pave the way for a rally to year's high above $4200.


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    Disclaimer: The author does not own any of these shares. This content, which is prepared for purely educational purposes, cannot be considered as investment advice.

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