Bitcoin is primed for a breakout in spite of selling pressure

Bitcoin appears ready to break out, despite recent selling pressure that has dampened its short-term performance.

The pressure came after the announcement that creditors of the defunct Mt. Gox exchange would be receiving about $9 billion in Bitcoin.

And then Germany started dumping its billions of dollars in seized BTC. This caused concerns about an influx of supply hitting the market, causing Bitcoin to pull back in recent weeks.

New all-time high when?

But let’s get real here. Bitcoin has a knack for bouncing back stronger. According to Inside Edge Capital, it might have just found solid footing in the $49k to $59k range.

Source: TradingView

If this support level holds, we’re getting ready for a third assault on the mighty $65k to $73k resistance zone.

The analysts are so confident they’ve even thrown a 2% holding of the new iShares Bitcoin Trust (IBIT) into their Tactical Alpha Growth portfolio. The big picture? BTC could shatter its previous highs and shoot for the $105k to $109k range in 2024.

Now, let’s talk about the bigger picture. It’s not just about the immediate supply issues. The broader market dynamics are in play, and they’re looking pretty damn good for Bitcoin.

Source: TradingView

Take a peek at the comparison of Bitcoin, gold, and US 10-year yields since 2020. You’ll notice something intriguing: BTC and gold have been moving together. Digital gold and heavy gold, side by side.

But here’s the kicker – both Bitcoin and gold show an inverse correlation with US bond yields. When bond yields go up, the shine of non-yielding assets dims a bit.

Persistent inflation and the Fed’s hawkish stance on interest rates don’t help either. High inflation and rising rates tend to hurt BTC, gold, and even the stock market. It’s a triple whammy.

Source: TradingView

Let’s zoom in on Bitcoin’s performance against gold since the 2022 lows. Spoiler alert: Bitcoin leaves gold in the dust. While gold has managed a respectable 45% gain, the king of cryptos has skyrocketed by about 280%.

The positive correlation between BTC, gold, and the stock market over recent months tells us they’re all riding the same economic waves.

If you’re bullish on the stock market, you should be cheering for Bitcoin and gold to climb too. Why? Because their rise suggests lower US interest rates as the Fed’s rate hikes wind down.

Reporting by Jai Hamid