As Bitcoin continues to navigate the ever-changing landscape of the cryptocurrency market, traders and analysts are closely monitoring key indicators to gauge the potential for future price movements. Recent developments suggest that the world’s largest cryptocurrency may be on the verge of a significant upward trend, despite some mixed signals.

TLDR

  • Two key Bitcoin trading indicators, the funding rate and three-month annualized basis rate, suggest that the price may be poised for an upward move.

  • The Bitcoin 200-day moving average has reached an all-time high, indicating a potentially bullish long-term market trend.

  • Despite optimistic long-term indicators, some metrics, such as dormant Bitcoin circulation and active addresses, have shown a decrease in recent months.

  • Standard Chartered predicts that a second-term Republican president, like Donald Trump, could be positive for Bitcoin due to looser regulations and the approval of spot ETFs.

  • Bitcoin’s price action since March has consolidated in a falling wedge pattern, hinting at a potential 20% upward breakout.

Two important Bitcoin trading indicators, the funding rate and the three-month annualized basis rate, have recently “cooled off” after briefly dipping into negative territory. According to Will Clemente, co-founder of Reflexivity Research, this could be a sign that Bitcoin is consolidating before the next leg up.

Did a nice look-through of the market for the first time in a week.

Funding rates & Basis have both cooled off after briefly reaching negative readings while stablecoin supplies are rising again. Looks like we're consolidating before the next leg up. pic.twitter.com/OHLkMrTqUY

— Will (@WClementeIII) May 7, 2024

The funding rate, which is used by exchanges to balance out long and short positions, has recovered from a negative rate of -0.0050% on May 4 to a positive rate of 0.0091% at the time of writing. This shift in sentiment, coupled with a slight increase in Bitcoin’s price, has led some traders to feel extremely bullish about the cryptocurrency’s near-term prospects.

200-Day Moving Average Reaches All-Time High

Another key indicator that has caught the attention of market participants is the Bitcoin 200-day moving average, which has reached an unprecedented high of $50,178.

This milestone, which smooths out day-to-day price volatility, offers a clearer view of the underlying long-term market trend and suggests a potentially bullish outlook for Bitcoin.

Prominent Bitcoin enthusiast Anthony Pompliano emphasized the significance of the 200-day moving average surpassing the $50,000 mark, noting that the long-term thesis for Bitcoin remains as strong as ever, despite the cryptocurrency’s notorious volatility.

Bitcoin's 200 day moving average just hit a new all-time high.

GBTC saw the first day of inflows in 78 days.

Don't get lulled to sleep by bitcoin going sideways. The long-term thesis is as strong as ever.

Here is my segment on @SquawkCNBC this morning. pic.twitter.com/BG6GkzqVIi

— Pomp ???? (@APompliano) May 6, 2024

While the long-term indicators paint a promising picture, some metrics have introduced a note of caution.

Santiment’s data reveals a decrease in dormant Bitcoin circulation and active addresses in recent months, particularly since early March, just before Bitcoin reached new heights.

This decline suggests a potential cooling off among long-term holders and a decrease in overall network activity.

Looking beyond the technical indicators, Standard Chartered analysts have suggested that a second-term Republican president, such as Donald Trump, could be beneficial for Bitcoin. The bank cited the potential for looser regulations and the approval of spot Bitcoin exchange-traded funds (ETFs) under a Republican administration.

Standard Chartered has revised its Bitcoin price target to between $150,000 and $200,000 for the end of 2025, taking into account the increasing likelihood of a Trump victory in the upcoming U.S. presidential elections.

Technical Analysis: Falling Wedge Pattern Hints at Upward Breakout

From a technical perspective, Bitcoin’s price action since March has consolidated in a falling wedge pattern on the one-day time frame. This bullish reversal pattern suggests a potential 20% upward breakout, with a target objective of $76,116.

Traders looking to take long positions in Bitcoin should wait for a stable break above the $68,000 level and a higher low on the Relative Strength Index (RSI) before entering the market. A steady move above $70,000 could trigger a reclamation of the $73,777 peak and pave the way for further upside.

While the bullish sentiment is evident in the Bitcoin market, traders should also be aware of potential downside risks. A break below the lower trendline of the falling wedge pattern and a descent below $56,000 would invalidate the bullish thesis, potentially leading to a deeper correction.

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