4 things that can spark the next Bitcoin bull cycle

Bitcoin (BTC) has dropped nearly 15% from its yearly high of around $31,000, with the recent regulatory crackdowns on Coinbase and Binance crypto exchanges and the Federal Reserve’s hawkish forward guidance accelerating its selloff.

Still, Bitcoin is up 60% year-to-date (YTD), holding above a technical support level of $25,000. Moreover, a new bull cycle can begin for a few reasons.

Bitcoin halving

The next Bitcoin halving, a pre-programmed event that slashes the cryptocurrency’s supply rate by half every four years, is in April 2024.

The previous three Bitcoin halvings (2012, 2016, 2020) have all preceded massive BTC price rallies and new all-time highs. For instance, BTC is up 276% since the previous halving in May 2020. 

<em>Bitcoin price performances since the last three halvings. Source: Glassnode</em>

The market will likely be in an accumulation zone until the halving, according to analyst Lark Davis, who anticipates Bitcoin to test its record high of $69,000 in the next 18-24 months. One analyst even sees the price hitting $160,000 by April 2024.

Related: Why Cathie Wood is bullish on Coinbase stock and believes Bitcoin will reach $1 million

BlackRock Bitcoin ETF

BlackRock’s Bitcoin ETF application to the U.S. Securities and Exchange Commission (SEC) has also boosted confidence in a potential BTC price rally in the days leading up to the halving.

The investment firm, which manages $8.5 trillion in assets, has a near-perfect ETF approval record with the SEC. The SEC’s deadline to respond to BlackRock’s application is around March 2024, a month before the halving.

An SEC approval may double Bitcoin’s bullish prospects post-halving, several analysts argue.

“Your are watching game theory at work,” analyst Crypto Tea states, noting:

“BlackRock understands the bitcoin halving is less than a year away. New supply will decrease while demand continues to increase from worldwide hyperinflation. They are asset managers and need to capture Bitcoin’s performance before their competitors do.”

Bitcoin dominance rising

The latest SEC crackdown on crypto exchanges Binance and Coinbase has left many top altcoins under stress, particularly those deemed “unregistered securities.” That has coincided with the Bitcoin’s crypto market dominance crossing 50% for the first time in two years.

<em>Bitcoin market dominance index. Source: TradingView</em>

In other words, capital is moving from altcoins to Bitcoin as the latter is not considered a “security” by the SEC. Therefore, BTC may be seen as the “safe” bet when compared to the 60+ cryptocurrencies deemed “securities” by the regulator. 

MicroStrategy cofounder Michael Saylor predicts this will push BTC’s market cap to 80% of the total crypto market in the coming years. He said:

“Regulatory clarity is going to drive Bitcoin adoption by eliminating the confusion & anxiety that has been holding back institutional investors. Bitcoin dominance will continue to grow as the #Crypto industry rationalizes around $BTC and goes mainstream.”

BTC price “bull flag”

Technicals show Bitcoin painting a clear bull flag pattern on its longer-timeframe (LTF) charts, suggesting an upside continuation of its overall recovery rally.

<em>BTC/USD weekly price chart. Source: TradingView</em>

A bull flag gets resolved after the price breaks above its upper trendline and rises by as much as the height of the previous uptrend. As a result, Bitcoin’s bull flag target comes near $35,500 — a level that was strong support in May 2021 and May 2022.

Still, Bitcoin will need to close decisively above $35,500 to begin a bull cycle, given it would still be a lower high compared to the cryptocurrency’s previous bear market peaks.

Interestingly (and simultaneously to the bull flag pattern), BTC price could be on the cusp of a breakout in its prevailing inverse-head-and-shoulders (IH&S) pattern, as shown below.

<em>BTC/USD weekly price chart. Source: TradingView</em>

An IH&S is a bullish reversal pattern, confirmed by the formation of three troughs under a common neckline resistance. The middle trough comes to be deeper than the other two, which have more or less the same height.

As a rule, an IH&S pattern is resolved after the price breaks above the neckline and rises by as much as the distance between the middle trough’s lowest point and the neckline. Sometime, the price returns to retest the neckline as support after the first breakout attempt.

Related: 31% of young Aussies hold crypto despite being ‘risk averse’ — ASX survey

Thus, a rebound from the IH&S neckline could have BTC price rally toward $40,500, up more than 60% from current price levels, and confirming a new bull cycle.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.