Historically Bitcoin price has been staging a 2 year rally around each halving event that happens approximately every 4 years
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Markus Helsing, General Manager at Quad Code, comments on Bitcoin.
BTC price performance
Bitcoin has been trading higher for the last 4 weeks reaching a four-week high of around $23,954 from a low of $16,333 during the same period. This represents a stunning more than 40% increase within 4 weeks from low to high. During the same period the US S&P 500 index rose by around 7.7% from low to high.
Bitcoin Statistics
Historically Bitcoin price has been staging a 2 year rally around each halving event that happens approximately every 4 years. Halving is simply the event that makes the BTC mining algorithm exponentially more difficult to solve and usually results in a 50% cut for miner’s rewards. Usually the rally starts one year ahead of the event and lasts up to one year after the event. The next halving event is expected to happen around March 2024, so we are really close to the 1st year ahead of the event whereas according to past performance BTC starts to rise in price. With that said, past performance cannot guarantee future performance, but could nevertheless provide a better sense of direction.
Risk sensitivity
BTC has surprisingly shown increased sensitivity in investor risk sentiment. Namely, when investors become risk averse BTC weakens in-line with other risk assets like stocks and the S&P 500 index. At the same time when investors are optimistic and willing to take on risk, BTC price gets stronger, in-line with other risk assets like the S&P 500 and stocks.
The Fed factor
One of the leading factors shaping the markets and investors sentiment is the Fed monetary policy and its actions. Unsurprisingly the recent slowing down of the Fed hawkish policy has benefited the S&P 500, improved investors sentiment, weakened the US Dollar and boosted the price of BTC as well. Investors anticipate that 2023 could mark the end of the Fed tight monetary policy and give way to more accommodative days in 2024. As long as the Fed does not change the story to be more hawkish, the Fed factor can be considered a bullish one for BTC and the S&P 500 alike. In the opposite situation that the Fed announces harder measures to fight inflation and extended duration then both BTC and the S&P 500 could be expected to suffer downward pressure.
Technicals
Technicals show an improving picture with BTC price decisively crossing above the 100 period SMA. Meanwhile, the recent bullish move has cleared many resistance(now support) levels but momentum somehow got weaker as indicated by a sideways movement at the top and a falling RSI line indicating divergence with the bullish move.
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