The equity and crypto markets entered a correction in the middle of March after having proposed a vertical rise since October 2023. For this month of May, the market is returning to a long-term opportunity price zone: let’s take stock of Bitcoin.
“Sell in May and go away” is not a worry for Bitcoin
Risky assets in the stock market have been under pressure since the middle of March, with a significant drop in stock market indices and the price of Bitcoin and cryptos while disinflation in the US has made no further progress since the beginning of the year.
Indeed, at the beginning of 2024, the market consensus was in favour of 7 rate cuts by the Federal Reserve (FED) in 2024, the consensus is now for a single rate cut, and the probability of the scenario of zero cuts in the US federal funds rate has risen from 0 to over 20% (see the first chart below).
Should we exploit this 23% correction in Bitcoin’s price since its all-time high of $73,000 to get back into buying?
I think the answer is yes. In fact, the answer would be no in very specific fundamental cases, such as a massive second wave of US inflation accompanied by a Fed rate hike to 5.75% (which leading inflation indicators do not indicate), a Bitcoin ban in the West or a technical problem with the Bitcoin blockchain.
The halving of BTC took place 2 weeks ago, and statistics remind us that the upward cycle of “price discovery” begins on average 80 days after halving. So we need to be patient.
Naturally, the timing of the next bull run will be fine-tuned by US macro data, in particular the pace of disinflation over the next few months, and the trend in US bond yields. The next updates of the CPI, PCE and PPI inflation indices will be decisive
Implied probability of zero FED rate cuts in 2024
BTC price has entered long-term interest zone
From a technical analysis point of view, and after giving up 23% since its all-time high, the Bitcoin price has entered a zone of long-term interest.
This is the price zone between $50,000 and $57,000, a very classic retracement and extension interval for the end of corrective wave 4, which I’ve been talking about in the TCN columns for several weeks.
To validate the end of the correction, however, we still need to build a bullish reversal pattern and overcome resistance. As long as the market remains below resistance at $60,000, the correction is still underway. As for my year-end bullish target, I’m maintaining it at $90,000.
Chart showing weekly and daily Japanese candlesticks for the Bitcoin price
