Bitcoin price rallies of at least 50% typically follow the emergence of low crypto market leverage, robust retail sales data, and hawkish Federal Reserve signals. Historical surges have occurred in early 2024, early 2023, and mid-2021, with significant price gains observed each time these factors align. Upcoming speeches by Fed Chair Jerome Powell will be critical to the future of Bitcoin pricing.
Bitcoin’s price patterns suggest that a rally of at least 50% is likely when certain conditions unfold. It tends to surge after periods of low leverage in the crypto market alongside unexpectedly strong retail sales data and hawkish tones from the US Federal Reserve. Historically, these three elements together have led to Bitcoin price increases of 50% or more across three distinct seven-week spans.
In fact, recent times have seen the price of Bitcoin jump from $40,000 to around $73,500 in early 2024 when these factors collided. Similarly, in early 2023, the same combination lifted Bitcoin from $16,700 to $25,100 over just seven weeks. Even further back in July 2021, a similar scenario saw an impressive 76% rise.
For instance, from January 25 to March 13, 2024, Bitcoin skyrocketed by 84%. After settling near $43,000 in December 2023, the cryptocurrency tested $48,000 in early January, but a subsequent drop to $37,800 occurred shortly after. Notably, the perpetual futures funding rate dropped to just 4% annually, a crucial aspect of this bullish pattern.
Contributing factors included US retail sales for December 2023, which exceeded projections by a significant margin, rising by 0.6%, against estimates of 0.4%. Additionally, Fed Chair Jerome Powell’s remarks during a press conference on January 31, 2024, conveyed a hawkish stance with no foreseeable interest rate cuts, further solidifying bullish sentiments.
In another instance, Bitcoin prices jumped 50% between January 3 and February 20, 2023. Before this surge, Bitcoin stagnated below the $18,000 mark for two months, reflecting little interest in leveraged positions. However, on January 3, 2023, the funding rate on Binance soared to 50% within days, coinciding with stronger-than-expected US retail sales data that climbed 3% month-over-month, surpassing the anticipated 1.9%. During a speech on January 10, 2023, Powell’s comments about likely tighter monetary policy also contributed to the bullish trend.
Another notable rally happened from July 20 to September 7, 2021, with Bitcoin gaining 76%. After sliding from $40,000 to below $30,000, market sentiment seemed dampened. However, during this period, the funding rate spiked from 0% to 37% in a fortnight, and a surprise increase in US retail sales by 0.6% contradicted earlier predictions, leading analysts to predict a decrease of 0.4%.
Powell also hinted at a possible reduction in asset purchases during his remarks at the Jackson Hole Economic Symposium, which added to market optimism. The underlying theme uniting these rallies is the easing of expectations for the Federal Reserve’s expansionary policy and low demand for leveraged positions, especially among Bitcoin supporters. When robust retail data is thrown into the mix, it sets the stage for potential bull runs as traders often tread carefully amid economic uncertainties.
Looking ahead, Fed Chair Powell is slated to present on June 18, coinciding with the central bank’s interest rate decision. Key events like the Beige Book release on July 16 and the Jackson Hole Symposium starting on August 21 will be pivotal points to watch out for. Keeping an eye on US retail sales data for May, expected on June 17, and June data, due July 15, will be vital too. This advisory is for general understanding and should not be construed as financial or investing advice.
