Bitcoin Nears $45,000! BTC Eyeing Breakout

Bitcoin, the world’s first and largest cryptocurrency, started the year 2024 with a strong rally, breaking above the $40,000 resistance level and reaching a high of $44,781.34 on 6 Jan 2024, according to the CoinMarketCap Bitcoin Price Index (XBX).

The Bitcoin price increased by 1.70% in the past 24 hours, bringing its market capitalization to $854 billion. What are the factors driving Bitcoin’s price and what are the prospects for the future? Here is a brief analysis of the current situation and the possible scenarios.

BTC Price Prediction

Bitcoin’s price has been influenced by several factors in the past few days, including the anticipation of the approval of the first spot Bitcoin exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC), the positive sentiment from institutional investors and influencers, and the technical indicators showing a bullish trend.

One of the most awaited events in the crypto industry is the potential approval of the spot Bitcoin ETFs, which would allow investors to buy and sell Bitcoin directly through their brokerage accounts, without the need to deal with the complexities and risks of crypto custody and trading platforms. The SEC could approve the spot Bitcoin ETFs as soon as next week, according to some sources, which would mark a watershed moment for the industry and boost the demand and liquidity for Bitcoin. The SEC has already approved several Bitcoin futures ETFs, which track the price of Bitcoin futures contracts, but the spot Bitcoin ETFs are considered more attractive and efficient for investors who want to gain exposure to the actual Bitcoin price.

Bitcoin Nears $45,000! Btc Eyeing Breakout

Eyes on breakout ????.

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Another factor that has been supporting Bitcoin’s price is the positive sentiment from institutional investors and influencers, who have been increasing their exposure and endorsement of Bitcoin as a store of value and a hedge against inflation. For instance, MicroStrategy, a business intelligence firm that has been loading up its Bitcoin reserves, announced that it purchased an additional 1,914 Bitcoins for $94.2 million on 4 Jan 2024, bringing its total holdings to 124,391 Bitcoins, worth about $5.5 billion at current prices. Moreover, Visa, the global payment giant, revealed that it processed more than $1 billion worth of crypto transactions on its network in 2023, and that it plans to expand its crypto services and partnerships in 2024. Furthermore, Jim Cramer, the host of CNBC’s Mad Money, said that he bought more Bitcoin during the recent dip and that he believes Bitcoin is the “Godzilla of finance”.

On the technical front, Bitcoin’s price has been showing a bullish trend, as it broke above the 50-day and 200-day moving averages, which are considered key indicators of the market sentiment. Additionally, Bitcoin’s price has formed a cup and handle pattern, which is a bullish continuation pattern that signals a possible breakout to the upside. The target of the cup and handle pattern is calculated by adding the height of the cup to the breakout point, which in this case would be around $52,000.

Weekly Price Analysis

Looking at the weekly chart, Bitcoin’s price has been recovering from the sharp correction that occurred in mid-December 2023, when it dropped from $48,000 to $36,000 in a matter of days. The correction was triggered by a combination of factors, such as the uncertainty over the Omicron variant of the coronavirus, the hawkish stance of the Federal Reserve, and the regulatory crackdown on crypto in some countries. However, Bitcoin’s price managed to find support at the $36,000 level, which coincides with the 61.8% Fibonacci retracement level of the rally from $28,000 to $69,000 that took place between July and November 2023. Since then, Bitcoin’s price has been gradually climbing back up, reclaiming the $40,000 level and testing the $45,000 resistance.

The weekly chart also shows that Bitcoin’s price is still within a descending channel that has been forming since the all-time high of $69,000 reached on 10 Nov 2023. The channel’s upper boundary is currently around $47,000, which could act as a major hurdle for Bitcoin’s price in the short term. However, if Bitcoin’s price can break above the channel and sustain above the $47,000 level, it could signal a reversal of the downtrend and open the way for further gains towards the $50,000 and $60,000 levels. On the other hand, if Bitcoin’s price fails to break above the channel and falls below the $40,000 support, it could resume the downtrend and test the $36,000 and $30,000 levels.

Future Outlook

The future outlook for Bitcoin’s price depends largely on the outcome of the spot Bitcoin ETFs decision by the SEC, which is expected to happen by 14 Jan 2024. If the SEC approves the spot Bitcoin ETFs, it could trigger a massive wave of buying pressure and institutional adoption for Bitcoin, potentially pushing its price to new highs. According to Messari, a prominent player in cryptocurrency research, Bitcoin is the “Godzilla of finance” and could reach a market capitalization of $10 trillion in the next decade, implying a price of over $500,000 per Bitcoin. However, if the SEC rejects or delays the spot Bitcoin ETFs, it could cause a disappointment and a sell-off in the market, putting downward pressure on Bitcoin’s price.

Another factor that could affect Bitcoin’s price in the future is the supply and demand dynamics, which are influenced by the halving events that occur every four years. The halving events reduce the amount of new Bitcoins that enter circulation every 10 minutes, creating a scarcity effect that increases the value of each Bitcoin. The last halving event took place in May 2020, when the block reward was reduced from 12.5 to 6.25 Bitcoins. The next halving event is expected to happen in 2024, when the block reward will be reduced to 3.125 Bitcoins. According to the stock-to-flow model, which is a popular valuation method that relates the existing supply of an asset to its annual production, Bitcoin’s price could reach $100,000 by the end of 2024 and $1 million by the end of 2028, based on the historical relationship between the halving events and the price cycles.