A hypothesis suggests Bitcoin’s price may rise 50% soon, based on historical patterns linked to low financial leverage, strong retail sales, and Fed monetary policy signals. Previous patterns in July 2021, January 2023, and January 2024 all resulted in significant BTC price increases. Current funding rates and retail sales data align with past conditions, but Fed monetary policy may heavily influence future outcomes.
A theory has emerged about Bitcoin’s price trajectory that suggests a potential 50% upswing in the coming months. This prediction draws from historical trends, particularly a specific pattern that has previously yielded such increases. Should this pattern recur, Bitcoin’s price might reach as much as $150,000.
Understanding this pattern involves examining a trio of coinciding factors in the US market: minimal financial leverage, stronger-than-anticipated retail sales, and assertive signals from the Federal Reserve concerning monetary policy. These economic indicators are tied to aspects like price inflation and interest rates, in addition to leverage levels across speculative markets.
Historically, there have been three scenarios mirroring this situation — July 2021, the start of 2023, and early 2024. Each instance saw Bitcoin’s price climb by over 50%. Notably, in July 2021, the rise was even as high as 76%, while early 2023 witnessed a more modest bump exceeding 50%, and the beginning of 2024 experienced increases exceeding 80%.
To see if history might repeat itself, we can look back at July 2021. The annualized funding rate for Bitcoin sat close to 0%, with US retail sales showing unexpected strength. Furthermore, a pivotal speech from the Fed chair in August hinted at the possibility of tapering quantitative easing, fulfilling the pattern’s conditions. Subsequently, Bitcoin’s price surged significantly from July through September.
In January 2023, the narrative was similar, with a low annualized funding rate and unexpectedly strong retail sales, alongside the Fed’s signals of tightening monetary policy due to inflation concerns. Once again, the circumstances fulfilled the pattern and resulted in a substantial increase in Bitcoin’s value.
Fast forward to January 2024, the annualized funding rate of perpetual futures hovered low at about 4%. Retail sales greatly eclipsed market expectations, and the Fed chairman stated that interest rates would remain unchanged, thus keeping a tight monetary stance. This reiteration of conditions yet again suggested a positive outcome for Bitcoin’s valuation.
Now, if we look at the current scenarios, the annualized funding rates for Bitcoin’s perpetual futures align closely with January’s numbers. March saw US retail sales also slightly above expectations, significantly surpassing the previous twelve months’ averages. However, it is vital to consider that the spike in March was likely influenced by recent tariffs, prompting many to purchase items sooner than planned. A subsequent drop in April is anticipated, although this could potentially lead to outcomes exceeding pessimistic forecasts.
The primary concern remains with the Fed’s monetary policy. To trigger the aforementioned pattern, there would need to be adverse developments in this area. Managing expectations, analysts believe the Fed is set to maintain rates through May, with some speculation about a potential cut in June. Therefore, any unanticipated negative updates could throw a wrench in markets already braced for stability.
A critical moment will arise during the Fed’s press conference on May 7. If Chair Powell indicates a maintained stance on rates, contrary to market expectations for cuts, it could satisfy the third condition of the pattern.
It’s worth mentioning that it’s not a given that meeting all three conditions automatically guarantees a significant rise in Bitcoin’s price. The cryptocurrency’s behavior doesn’t strictly depend on these factors and has a tendency, over the medium to long term, to inversely correlate with the Dollar Index (DXY).
Nonetheless, there’s a strong possibility that Bitcoin may thrive in the medium-short term. Recent occurrences of a notably weak DXY have allowed Bitcoin to bounce back from its previous decline that started in February. Should this pattern unfold, it could trigger a rebound, particularly if the dollar continues to weaken into the forthcoming month.
