Bitcoin Maintains Support Levels and Poised for Another Attempt at Breaking Records, Analysis Shows
Bitcoin has experienced a recent pullback after the news that creditors of the collapsed Mt Gox exchange are set to receive around $9 billion in bitcoin, sparking concerns about increased supply in the market. This pullback has manifested, and based on Elliott Wave analysis of the bitcoin chart, it appears that support may have formed within the $59k – $49k range. If this support holds, it could pave the way for a third attempt to breach the significant resistance zone of $65k – $73k.
Inside Edge Capital has recently included a 2% holding of the new iShares Bitcoin Trust (IBIT) in its Tactical Alpha Growth portfolio, indicating a bullish stance on bitcoin. The expectation is for bitcoin to surpass its all-time highs and reach the target range of $105k – $109k by 2024. Despite concerns about potential overhead supply in the bitcoin market, there is a macro-tailwind that could drive the rally forward.
An analysis of three charts displaying bitcoin, gold, and US 10-year yields since 2020 reveals interesting insights. Bitcoin and gold exhibit a close positive correlation, possibly due to their current inverse correlation with US bond yields. Notably, higher inflation expectations and sustained high rates can have a negative impact on bitcoin, gold, and the stock market. In this context, a rise in bitcoin and gold prices, coupled with lower US interest rates, could benefit stock market investors.
Comparing the performance of bitcoin and gold since the 2022 lows, bitcoin has significantly outperformed gold, with a rally of +280% compared to gold’s +45%. A weekly ratio chart of bitcoin/gold indicates that bitcoin may be poised to reassert its dominance over gold after a recent pullback into support levels.
In conclusion, a bullish outlook on the stock market suggests a desire for bitcoin and gold prices to rise alongside lower US yields. The hope is for bitcoin, particularly the IBIT position, to outperform gold mining stocks in terms of gains. Todd Gordon, the founder of Inside Edge Capital, is optimistic about the prospects for bitcoin and the broader market environment, emphasizing the potential for bitcoin to continue its upward trajectory.
