This week, Bitcoin witnessed a dramatic pullback, from its all-time high of $108,200 to below $95,000 due to sustained fears in the bond market. The soaring US bond yields fronted it.
The slide deepened in Bitcoin on Tuesday as U.S. bond yields, at their highest in more than two years, rose further after stronger-than-expected data showed U.S. job vacancies. A continuing bond market selloff Wednesday lifted 30-year and 10-year yields to 4.95% and 4.70%, respectively.
The yields have been rising, reflecting expectations that the Federal Reserve will maintain its hawkish monetary policy for the rest of the year. Analysts expect the release of Wednesday’s Federal Reserve minutes and Friday’s nonfarm payroll numbers to provide further insight into future monetary policy direction.
“Markets are no longer euphoric over bitcoin entering a new age where even the US Central Bank will hold a Strategic Bitcoin Reserve. Instead, Bitcoin’s role as an ultra risk-on, risk off asset has surfaced once again amid signs that the US Federal Reserve may keep interest rates elevated for longer than previously expected.”
Higher yields are likely to put pressure on risk assets, including stocks and cryptocurrencies,” said Mark Zandi, Chief Economist at Moody’s, who noted that inflationary policies of past administrations have yet to be purged.
Peter Brandt Optimistic Despite Bitcoin’s Short-Term Weakness
Legendary trader Peter Brandt, however, remains optimistic about Bitcoin’s long-term trajectory irrespective of the short-term weakness. “While immediate-term volatility is possible, Bitcoin is displaying a head-and-shoulders pattern that could indicate further fluctuations in price,” he said.
Charts morph all the time. This is why we should never trust any given pattern. Intra-day charts morph into daily charts into weekly charts into monthly trends – until we get a chart that works.
Bitcoin $BTC — major trend remains up, but
daily chart tracing out a H&S top – this… pic.twitter.com/PVJ1U2YPos— Peter Brandt (@PeterLBrandt) January 8, 2025
Yet, Brandt and other analysts still point to the strong technical structure of Bitcoin, citing bullish formations on the weekly chart that hint at further upside momentum.
Bitcoin’s weekly chart has an inverse cup-and-handle bullish continuation pattern, which means more upside could be seen in the coming weeks. The handle portion of the pattern was breached in November, and from there, it traveled to its record high in December. The cryptocurrency is now consolidating in a bullish pennant below the psychological $100,000 resistance level.
The pennant pattern consists of a vertical rise followed by triangular consolidation and normally precedes a strong upward movement. Another positive factor is that Bitcoin has remained above its 50-day moving average.
Technical analysts now believe a breakout is possible before key macroeconomic events occur, like on January 20th, the day Donald Trump takes office. If luck favored buyers, according to the extent of the Cup bottom, another key target level awaits: $122,000.
Mercury CEO Petr Kozyakov remains optimistic about the asset’s recovery despite such pressure on its price. “Bitcoin’s resilience above key support levels and formation of bullish patterns creates a high likelihood of upward momentum in the nearest future.
While rising bond yields and Federal Reserve policy continue to create headwinds, Bitcoin’s strong technical indicators and historical behavior near major psychological levels suggest the cryptocurrency remains bullish.
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