Bitcoin (BTC) looks poised to surge towards $78,000 in the coming weeks, driven largely by technical factors on the price chart and the latest economic stimulus package from China.

Central Bank Liquidity Will Boost Bitcoin Demand: Analyst

On September 24, the People's Bank of China (PBOC) announced that it would inject about $140 billion in liquidity into the financial system by cutting the reserve requirement ratio (RRR) by 50 basis points.

The PBOC has cut borrowing costs and eased property purchase rules to support the struggling property market and the broader economy.

Jamie Coutts, chief crypto analyst at investment management firm Real Vision, argued that China’s latest stimulus package bodes well for Bitcoin, pointing out that it will influence other central banks to follow suit.

“The bottom has been set for global central bank liquidity in this cycle. Sit back and watch other central banks line up,” he stressed, adding:

“In a credit-based fiat fractional reserve system, corruption is a feature, not a bug.”

The PBOC’s recent stimulus announcements have often been accompanied by large rallies in risk assets like Bitcoin. For example, the PBOC injected $367.7 billion via reverse repo in October 2023 and $140 billion by cutting RRR by 50 basis points in January 2024.

Bitcoin price surged more than 100% following stimulus package announcements.

Interestingly, the direct link between Chinese liquidity and Bitcoin is less clear due to the 2021 crypto mining ban in China.

However, as Coutts points out, Bitcoin’s performance remains closely tied to global liquidity conditions, and China’s easing measures could prompt broader changes in risk appetite.

Technical Analysis: Bullish Flag Pattern Breakout Heading Towards $78K

Adding to the positive outlook is the formation of a bullish flag pattern on Bitcoin's long-term chart.

A bullish flag pattern appears when the price corrects within a falling channel after a strong upward move. As a rule, this pattern will be resolved when the price breaks through the upper trendline and rises to the previous high.

As of September 24, BTC price is testing the upper trendline of the flag pattern for a potential breakout above $78,000—a new record high.

Conversely, a drop from the upper trendline could send the price down to the lower trendline, which corresponds to the 0.0 Fibonacci resistance level around $5.

BTC may need to go well above $80,000 to reach a new record high when adjusted for inflation, according to our report.

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