Update - June 12, 2024

Bitcoin Looks Primed to Rally Higher

It’s seemed like an uneventful spring for Bitcoin.

After soaring 80% at the beginning of the year, the world’s leading cryptocurrency has settled into a holding pattern for the past four months.

In the realm of technical analysis, this is termed a “consolidation phase.”

But this phase appears to be winding down as Bitcoin looks poised to make another run higher.

Hedge Fund Bearishness Is Your Opportunity

Bitcoin briefly crossed the $70,000 mark this week as fresh data pointed to a slowing U.S. economy. The news pushed down Treasury yields and lifted risk assets like Bitcoin higher.

The largest cryptocurrency benefited from high inflows into spot ETFs holding Bitcoin, with U.S. Bitcoin ETFs acquiring around 25,729 Bitcoin last week. That’s about eight times more than the amount mined over the same period.

But these inflows may be about to skyrocket. That’s because hedge funds have heavily engaged in a long spot, short futures Bitcoin carry trade, attempting to earn small gains while risking substantial exposure.

In simple language, hedge funds are buying Bitcoin at the normal price (that’s the “long spot” part) and betting that its price will go down in the future (that’s the “short futures” part).

It’s like they’re trying to pick up a few coins in front of a steamroller. They might make some money, but they’re taking a big risk. If Bitcoin’s price goes up a lot, they could lose a lot of money.

This strategy involves a significant short position – approximately $30 billion – set to be liquidated around the $72,000 mark. This means that if Bitcoin trades above $72,000, hedge funds will have to buy back $30 billion worth of Bitcoin to cover their short bets.

And the need to buy back Bitcoin to cover the short positions would create a surge in demand.

This increased buying pressure could push Bitcoin’s price even higher, potentially creating a feedback loop in which rising prices force more short positions to be covered.

The result? Even higher prices.

While a hedge fund-driven buying frenzy provides a fundamental catalyst for higher crypto prices, the technical picture is also looking tempting.

Bitcoin’s Technicals Scream “Buy”

Bitcoin’s price is gearing up for a breakout across daily, weekly and monthly charts. This is an exceptionally rare phenomenon. Having professionally analyzed cryptocurrencies since 2011, I can confidently say this isn’t something you see every day.

At first glance, these three charts may look identical. But look at the time frame for each one…

For Bitcoin investors, this is a bullish signal. When an asset signals a breakout across multiple time frames, it means the underlying trend is strong and could attract substantial buying interest.

Additionally, the increasing volume during this consolidation phase suggests accumulation by large investors. They’re positioning themselves ahead of what they expect to be a significant move upward. This bolsters the bullish outlook even further.

Considering these technical indicators – along with positive fundamental and sentiment indicators – now seems like a prime opportunity to invest in Bitcoin before its next major leg higher.

The Stars Are Aligned for Crypto

Whenever I remind people I have a $165,000 target price for Bitcoin this cycle, the most common response is…

When? When will it hit $165,000?!

Well, I hate to tell you I don’t have a crystal ball. All I can do is analyze the fundamentals, technicals and sentiment… and manage the risk appropriately. And anyone telling you otherwise isn’t giving you very good advice.

However, with solid inflows from Bitcoin ETFs, hedge funds’ short of Bitcoin set to liquidate at $72,000, and an extremely bullish technical Bitcoin chart on multiple time frames, the risk-reward is clearly in the bull’s favor.

Plus, we have a few more catalysts on the horizon. These include the listing of the newly approved spot Ethereum ETFs.

Bitcoin surged from $46,000 to a new all-time high of $72,000 in the months after Bitcoin ETFs started trading. If we see something similar with Ethereum, that will mean a target price of nearly $6,000 – a new all-time high.

I’d bet my bottom dollar that such a rally would cause the entire crypto market to rally higher as well, which would be good for our other altcoins, like Solana (SOL), Arbitrum (ARB) and VeChain (VET).

So while it’s been a snoozer of a few months for crypto, exciting times are on the horizon.

And I’m putting my money where my mouth is.