Just over two weeks ago, in my article "Crypto Countdown: Will Bitcoin and Ethereum Hit New Highs Before the 2024 Halving?", I analysed whether the largest cryptocurrencies Bitcoin and Ethereum had the potential to achieve new all-time high prices in the short term leading up to their upcoming halving events.
At that time, Bitcoin was trading in the $52,000 range, tantalizingly close to its previous all-time high of ~$69,420 (Nice!) set in late 2021. I predicted that continued inflows into Bitcoin exchange-traded funds (ETFs) at the pace of $250 million per day could provide enough buying pressure to catapult Bitcoin over its old record.
Since then, my predictions have come to pass. In the past couple of weeks, Bitcoin has surged past $69,000, validating the stock-to-flow model and four-year halving cycle theory that many analysts rely on. At the time of writing, Bitcoin's price is holding steady above ~$69,000, cementing its status as the dominant cryptocurrency once again.
In this follow up article, I will analyse Bitcoin's price action over the past month in more detail, examine what factors may have contributed to it breaking this key resistance level, and consider what this renewed upside momentum could mean for the rest of the ongoing crypto bull run.
Bitcoin price analysis since the previous article
Bitcoin broke above the psychologically important $60,000 resistance level in late February, gaining over 15% in a matter of days. It then surged past the psychological $69,000 level to set a new all-time high on some exchanges of ~$70,000 on March 8th, representing gains of over 38% from its price two weeks ago. Bear in mind that this a 5 figure asset, posting 5 figure upswings in weekly timeframes. Insane!
On-chain metrics like exchange reserve balances and active addresses have also trended positively. Exchange inflows of Bitcoin rose to their highest levels since October 2021 as new buyers entered the market. Daily transaction volumes on the Bitcoin blockchain increased nearly 30% to over 974,000 during the recent rally.
Overall, Bitcoin has re-animated the stock-to-flow model's prediction of renewed upside price action prior to the halving. Its break above $69,000 should give the bulls confidence that higher highs may still be in store.
Factors contributing to breaking the ATH
As predicted, continued strong inflows into the recently approved Bticoin ETF products has provided steady buying pressure. Over $66 billion has now been added to BTC ETF holdings since the start of 2024.
Inflation in the US and other nations surged to multi-decade highs, fuelling concerns about the purchasing power of fiat currencies. Bitcoin's fixed supply has attracted new institutional investors seeking a hedge.
The breaking of the $69k barrier generated positive media coverage and drew more individual investors back into the market after the crypto winter. This helped boost trading volumes on major exchanges.
Breaking this longstanding record price level seems to have provided the necessary validation and momentum for these factors to come together and fuel the next leg of the bull run.
Impact on other cryptocurrencies
- Have altcoins like Ethereum also performed strongly?
Yes, Ethereum has also seen strong gains over the past month. Its price rose nearly 60% and is now flirting with the psychologically import $4000 mark. While it hasn't posted new all-time highs, this outpaced Bitcoin and validated predictions of growing institutional demand through upcoming ETH ETFs.
- How have the prices of other large market cap coins changed?
Most other major altcoins posted double-digit gains, with Solana up 30% to ~$150 and Cardano rising nearly 30% despite its previous struggles.
Bitcoin's breakout seems to have energized broader market sentiment, benefiting other top cryptocurrencies with major ecosystems and use cases. Its validation of the bull cycle theory could fuel further upside for additional large cap altcoins in the months ahead if momentum is sustained.
Outlook going forward
- Potential upside price targets for Bitcoin given its momentum
I'm not one for making predictions, but that being said I would not be surprised if Bitcoin manages to crack the mythical $100,000 mark sometime this year. But don't quote me on that.
Rising inflation remains a concern as central banks throw the kitchen sink at monetary policy. Significant interest rate hikes could make riskier crypto assets less attractive versus government bonds. While faith in government bonds themselves is rapidly diminishing due to those same policies. Frankly, I think we're in uncharted territory here and things could get real interesting real fast.
Geopolitical tensions from events like the Russia-Ukraine conflict may also lead to renewed volatility. It's important for investors to remain mindful of macro risks that could potentially slow the bull run.
That being said it's starting to become apparent that the crypto market is decoupling from the macro economic 'tradfi' world. I like to think of crypto as a futuristic lifeboat on the side of the titanic old world monetary system. Have you secured your seat yet?
