Several technical and macro-financial signals are currently pointing to a plausible scenario of a tactical year-end rebound for Bitcoin, without necessarily confirming a structural bullish reversal. Read Vincent Ganne’s technical analysis.
Technical and fundamental signals for a dead cat bounce
Several technical and macro-financial signals are currently converging towards a plausible scenario of a tactical year-end rebound in the price of Bitcoin, without necessarily confirming a structural bullish reversal. This scenario is more akin to a dead cat bounce, i.e., a temporary rebound within a more fragile dynamic that could be the famous “cyclical bear market.”
The first element comes from technical analysis, using the Bressert DSS on a weekly basis. Historically, this cyclical oscillator has shown a good ability to identify phases of excess, both upward and downward. Currently, the DSS is moving in a deeply oversold zone, at levels comparable to those observed during previous intermediate lows.
In the past, this type of configuration has often preceded significant, sometimes violent, technical rebounds, but these have rarely been sustainable when the macro and structural context remained weak. In other words, the signal points to a technical rebound, without guaranteeing a resumption of the underlying uptrend, as long as the bear market has not run its course.
The second factor concerns overall dollar liquidity, and more specifically US net liquidity. The combination of the Fed’s “technical” QE, aimed at managing reserves, and a declining TGA (Treasury General Account) could temporarily support this liquidity.
Even in the absence of conventional QE, halting the marginal deterioration in liquidity is often enough to boost high-beta assets such as Bitcoin. Historically, Bitcoin has reacted less to the absolute level of liquidity than to changes in its direction. A shift from negative to neutral or even slightly positive momentum may therefore be enough to trigger a recovery in the price of Bitcoin.
What rebound is possible if the market repeats the previous bear market (that of 2022)?
Finally, a third angle of analysis is based on a fractal and behavioral reading, comparing the current structure to that of the previous bear market. On several occasions, Bitcoin has experienced sharp rebounds after a period of deep correction, before resuming a more bearish or sideways trajectory. The chart below offers a hypothesis of price action for the coming weeks by applying the structure of the dead cat bounce from the 2022 bear market to our current price action. Please note that there is still a possibility that the Bitcoin price will first test the $70-80K zone before entering a dead cat bounce phase.
In summary, the convergence of the Bressert DSS signal, a slight improvement in US liquidity, and a pattern of past cycle repetition reinforces the hypothesis of a technical rebound in Bitcoin at the end of the year.
However, this scenario remains fragile, dependent on technical factors and flows, and should not be confused with the start of a new sustainable bullish cycle.
Caution therefore remains the order of the day: a dead cat bounce is, by its very nature, attractive… but rarely lasting, and it will occur when no one is expecting it.
