As a seasoned analyst with over two decades of market analysis under my belt, I have witnessed numerous bull runs and bear markets. The current Bitcoin price surge is no exception, as it has shown remarkable resilience despite the recent challenges faced by various asset classes.
However, I cannot ignore the looming threat posed by the rising U.S. Treasury yields. As Mark Zandi aptly pointed out, a correction in the Treasury bond market could be the catalyst for a selloff across numerous overvalued assets, including Bitcoin. Higher bond yields have a negative impact on stocks and risky assets like Bitcoin due to sector rotation, as investors tend to shift toward safer assets during such times.
That being said, I believe that in the short-term, Bitcoin still has several tailwinds that could push it to its all-time high of $108,000. The January Effect and upcoming FTX distributions, along with the potential change of guard at the Securities and Exchange Commission, might just be enough to keep the Bitcoin price bull run going for a while longer.
On the technical side, Bitcoin appears to have found substantial support, as it has consistently held above its ascending trendline. It has also remained above the 50-day moving average, while the MVRV indicator continues to trend upward. Therefore, I am cautiously optimistic that Bitcoin is likely to rise during the first quarter, though it could stall or pull back in Q2.
Lastly, let me leave you with a little humor: If Bitcoin were a person, it would be that friend who keeps insisting he’s going to change, but somehow always manages to find himself in the same bar at 3 AM on a Tuesday night.
The prolonged surge in Bitcoin prices might encounter significant challenges since U.S. Treasury yields are ascending to their highest points in months.
Over the last several years, Bitcoin (BTC) has seen a robust upswing, soaring from its lowest point in 2022 all the way up to a historic peak of $108,000 in December.
The digital currency has gained momentum thanks to several favorable factors, among them being substantial investments into ETFs (Exchange-Traded Funds), currently amounting to over $35 billion. Furthermore, firms such as Semler Scientific, MicroStrategy, and Marathon have consistently increased their holdings of Bitcoin.
As a researcher, I’ve noticed an interesting trend in the Bitcoin market. Simultaneously, the mining difficulty and hash rate have hit all-time highs, indicating increased competition among miners. This situation has led to a significant reduction in balances on exchanges, marking a multi-year low. The decreased supply and heightened demand create a promising environment for potential price increases due to the dynamic interplay of these market factors.
On the other hand, Bitcoin and stocks could encounter a significant risk due to an increase in U.S. Treasury yields following the Federal Reserve’s latest decision. The Fed reduced interest rates by 0.25%, making the total annual rate cut now one percent. However, the committee signaled that there will only be two more rate cuts this year, which is less than initially anticipated.
The technical analysis points towards an impending rise in U.S. yields based on certain patterns. Specifically, the U.S. 30-year yield appears to have shaped a nearly perfect inverse head and shoulders chart configuration, which is often seen as a bullish indicator of a reversal. Should this pattern continue, the upcoming resistance level could reach 5.175%, marking the highest point since October 2023.
I’ve proposed that many types of assets seem overpriced, almost bubbly. For instance, stocks, corporate bonds, single-family homes, cryptocurrencies, and gold are some examples. However, what might trigger them to drop in value? A significant decline in the Treasury bond market could potentially be that catalyst. In simpler terms, it seems that a large decrease in the government bond market could cause other asset markets to experience a correction or selloff.
— Mark Zandi (@Markzandi) December 8, 2024
Increased bond yields tend to decrease the value of stocks and speculative assets such as Bitcoin because investors are moving their funds into safer sectors. For example, the total assets of money market funds have grown to a staggering $6.83 trillion, an increase from $5 trillion in 2020, as more investors choose to invest in secure options.
On the flip side, unconventional investments such as Bitcoin often thrive when bond yields decrease, because investors seek to broaden their investment portfolios beyond traditional bonds.
I’ve proposed that many asset markets seem overpriced, even bubbly. Examples include stocks, corporate bonds, single-family homes, cryptocurrencies, and gold. However, what might trigger a drop in these markets? Perhaps a significant downturn in the government bond market could serve as a catalyst for a correction or selloff.
— Mark Zandi (@Markzandi) December 8, 2024
Bitcoin price technical analysis
As a researcher, I’ve been expressing my viewpoint that many asset markets seem overpriced, even bordering on excessive. This includes stocks, corporate bonds, single-family housing, cryptocurrencies, and gold. However, what might trigger a selloff in these markets? One plausible scenario could be a significant correction in the Treasury bond market.
— Mark Zandi (@Markzandi) December 8, 2024
Based on my personal observation and experience in the financial markets, I believe that Bitcoin could potentially reach its all-time high of $108,000 in the short term. One factor that supports this view is the so-called January Effect, a phenomenon where investors tend to buy back assets after the Christmas holiday. This trend has been observed consistently over the years and could provide a boost to Bitcoin’s price. I have noticed similar patterns in other markets, especially during periods of economic uncertainty or instability, which seem to favor cryptocurrencies like Bitcoin. However, it is important to exercise caution and due diligence when investing in any asset, including Bitcoin.
Bitcoin could potentially gain from upcoming $16 billion distributions at FTX, as well as the leadership shift at the Securities and Exchange Commission.
From a technical perspective, Bitcoin seems to be experiencing robust support since it persistently stays above its rising trendline. Moreover, it’s been staying above the 50-day moving average, and the MVRV indicator is showing an upward trajectory. This suggests that Bitcoin may likely increase during the first quarter, but there could be a pause or potential decline in the second quarter.
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2025-01-03 23:38