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Money Monday: Crypto Bull Run Inbound?

Late Sunday, Bitcoin exceeded performance expectations when price action yielded a strong candle breaking through an important resistance threshold at $46,000. Price stopped short of $48,000 and is currently hovering around $47,500.

The elevator steps culminating to a higher-high is a good indicator of a change in sentiment across the crypto market. Bitcoin and altcoins have been plagued by a heavy bear market since November 2021 and the Sunday surge upward was a nice change. There were concerns that Bitcoin’s local bottom were going to be lower – some estimates as low as at $28k – but it looks like we’ve steered clear of that range for now.

Where Is It Moving?

It’s difficult to see a downtrend playing from this price action. War in Ukraine, government regulation, a global pandemic, the collapse of the ruble, and inflation have all been priced in Bitcoin well before this late-May 2022 uptrend began.

Barring another major war and panic sellers, I think it’s safe to assume that the next cycle bull run just began. USDT holders and bears are getting #rekt right now – good.

Macro Indicators

Volume is significantly lower. RSI showed a record YTD over-sold threshold at $33k and nice bounce up to mid-range levels – we’re not overbought yet.

Where can Bitcoin move from here? If we apply an Elliott Wave to the price action moving forward, I would assume Bitcoin hits ~$67k this summer, bounces back down to ~$42k low and then shoots up, converting resistance to support as crypto expands mass adoption.

But this is all speculation. Bitcoin could carry the rest of the crypto market through resistance this summer, making the Elliott Wave model moot. It’s possible we’ll see a runup to new ATH similar to what we saw in September / October 2020. I would argue that a scenario like that is unlikely because the volume just isn’t there to drive the price parabolically up.

However, with rising inflation rates on the Dollar, more people may adopt Bitcoin and cryptocurrencies as a hedge against it. If the purchasing power of the US Dollar doesn’t improve by June, I’ll be looking for Bitcoin volume levels to sharply increase (hopefully with price as well).

Bitcoin price sharply rose in September and October 2020 when sentiment around the US Dollar was low – people were out of work due to COVID restrictions and where else could you turn to make ends meet? It’s likely we’ll see something similar this time around if the Fed cannot successfully deflate the currency by the end of the year. I think at that point, people will start using crypto as an intermediary – a store of value – until they’re ready to “cash out” to pay for day-to-day things. It’ll essentially replace fiat bank accounts if the Fed can’t get its shit together.

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