Bitcoin tops $50,000 … the technical set-up appears very bullish … looking at past halvings to get a sense of how high we could go this time … Luke Lango is betting on altcoins taking market leadership
Love it or hate it, Bitcoin is racing higher. If you’re looking to put a wad of cash in your pocket fast, don’t miss what’s happening.
On Monday, Bitcoin topped $50,000 for the first time in two years. Its encore came yesterday when its market cap crossed $1 trillion for the first time since November of 2021. As I write Thursday, it’s pushed even higher to $52,000. Since the start of the month, it’s up 22%.
There are a handful of tailwinds for Bitcoin right now. We’ll begin our analysis with its short-term technical set-up.
Where Luke Lango is seeing bullishness in Bitcoin’s technical charts
For newer Digest readers, Luke is one of our resident crypto experts alongside Charlie Shrem. In their service Ultimate Crypto, they have closed portfolio winners including 551%, from LINK, 605% from MANA, and 834% from SAND. If you missed those returns, Luke believes the crypto sector is setting up for another run that could provide similar gains over the next year or two.
But let’s return to a short- and medium-term time frame. What’s the technical bull case?
From Luke’s latest issue of Ultimate Crypto:
The cryptocurrency markets blasted this week, supported by strong exchange-traded fund inflows, encouraging macroeconomic data, and some positive developments in the cryptocurrency industry.
The surge makes our recent round of dip-buys look prescient. But we do not think this short-term rally is over.
Rather, our technical work suggests that Bitcoin (BTC-USD) will likely soar >15% over the next one to two months…
…We received potential technical confirmation that a powerful crypto rebound was underway through a bullish crossover below the zero-line on Bitcoin’s Moving Average Convergence Divergence (MACD) indicator.
I’ll jump in here to make sure we’re all on the same page about the MACD while providing some visuals.
MACD stands for “moving average convergence/divergence”
It reflects changes in a price trend’s strength, direction, momentum, and duration. Traders use this tool by analyzing the location of the MACD line relative to its signal line, as well as the MACD’s positive or negative reading.
Below, we look at the bullish crossover that Luke just referenced (in blue). Also note the other occasions over the last six months when Bitcoin saw a bullish crossover. Some degree of gains always followed.
Since then, we have received further technical confirmation of this rebound with Bitcoin’s Relative Strength Index powering above 70.
For anyone less familiar, the RSI is a momentum indicator that measures the extent to which an asset is overbought or oversold. A reading over 70 suggests an asset is “overbought” (and likely poised to pull back as traders take profits) while a reading below 30 means it’s “oversold” (and poised for gains as bargain-hunters step in and buy).
While it would seem bearish that Bitcoin’s RSI is above 70 (suggesting profit-taking), history shows that when the crypto goes on a major bull run, its RSI can push far higher than 70 and remain there for a while as the gains rack up.
To illustrate, below, I’ve circled Bitcoin’s climb from last October through November that took place despite overbought RSI conditions.
Back to Luke:
[The MACD and RSI combo] is a rare and powerful 1-2 technical punch for Bitcoin wherein a bullish MACD crossover below the zero-line is followed by an RSI burst above 70.
This technical dynamic has emerged four times before in the current boom cycle. Each time, BTC rallied over the next 1-2 months.
Here’s a summation of those previous four times:
- Early-January 2023, right before Bitcoin powered from $19,500 to $25,000 over the next month
- March 2023, leading Bitcoin’s push from $26,500 to $30,500 over the next month
- June 2023, preceding Bitcoin’s climb from $30,000 to $32,000 over the next month
- Mid-October 2023, before Bitcoin surged from $29,500 to $45,000 over the next two months
Based on Bitcoin’s history, as well as the strength of its technical charts today, Luke believes this latest surge will push Bitcoin to $54,000 over the next several weeks (possibly sooner based on how Bitcoin is climbing).
A medium-term analysis of Bitcoin is no less bullish
The “halving” takes place in two months, and it’s likely to support a bullish Bitcoin trade up until the actual event.
To make sure we’re all on the same page, “Bitcoin miners” (think, computer whizzes) solve complex computer puzzles to release new Bitcoins. Their reward for doing so is an amount of Bitcoin that’s already baked into the system.
Each halving reduces this reward by half, hence the name “halving.” This time around, the reward per block of mined Bitcoin will decrease from 6.25 to 3.125.
Historically, these halving events have been very bullish for Bitcoin’s price. I’ll show you the numbers so you can see for yourself.
The first halving occurred on November 28, 2012. It reduced the block reward from 50 to 25 Bitcoin.
It’s price at the time of the halving was $13. Its peak the following year? $1,152.
The second halving came on July 16, 2016. It reduced the reward to 12.5 Bitcoin.
At the time of this halving, its price was $664. And the following year’s peak was $17,776.
The last halving happened on May 11, 2020, when the reward halved to 6.25 Bitcoin.
This time, Bitcoin’s price jumped from $9,734 at the time of the halving to $67,549 the following year.
So, respectively, these halving gains (from event to peak) measured as 8,761%, 2,577%, and 594%.
FX Empire suggests that this time, if Bitcoin mirrors past performance from the previous two halvings, its price could hit $225,000 by next year. That’s about 330% higher.
But be aware of the pattern. It likely won’t be a smooth climb. You especially want to be careful right around the halving event itself.
Here’s Bitpay.com:
In each of these cycles, the halving effect on the Bitcoin price was similar and displayed a pattern: a substantial rally leading up to the halving, followed by a brief correction and period of consolidation before the major bull run and blow-off top.
The peak occurred approximately 18 months after the halving each time. This is a highly simplified yet accurate description of the last three cycles.
Additional estimates of Bitcoin’s potential gains point toward roughly 100% returns or more
Marshall Beard of Gemini suggest we’ll hit $100,000 during this cycle.
CryptoCon believes $130,000 is in the cards by November 2025.
CoinCodex anticipates $170,000 by August 2025.
And BitQuant forecasts next year’s peak will top $250,000.
Even if they’re all wrong and, say, 100% gains won’t happen, the odds of a 20% – 40% jump from here is reasonable based on nothing but hype and momentum.
Stepping back, at the end of the day, trading is about taking calculated risks. We must balance potential gains against losses. And as we look at Bitcoin today, the risk/reward profile skews heavily in favor of gains.
This is the kind of bet we love to take. So, if you’re looking for a speculation offering good odds, don’t overlook Bitcoin.
For more of Luke’s crypto research as a subscriber to Ultimate Crypto, as well as the top altcoins recommendations, click here.
On that mention of “altcoins,” I’ll give Luke the final word:
We believe BTC will run to $54,000 over the next few weeks.
Altcoins should rally even more.
Our work also suggests that we are near or at that point in the boom cycle where crypto market strength should broaden out away from BTC and toward smaller altcoins. This is starting to feel like a more risk-on environment which will favor altcoins…
This boom cycle is still just getting started.
Have a good evening,
Jeff Remsburg
