4 Major Signal Analysis: Is $70,000 the Starting Point or the Endpoint of This Bull Market?

Author: 636Marx

Bitcoin is constantly testing around $70,000, and with market confidence boosting, various altcoins have also started to surge.

However, the author believes a key question arises: Is this level the beginning of further price increases for Bitcoin, or is it a sign of the current bull market coming to an end? We will examine four key indicators to determine whether $70,000 could be the starting point for further growth or the peak of this market cycle.

1. Bitcoin's Pi Cycle Top Indicator

The Pi Cycle Top indicator is a tool for identifying potential peaks in Bitcoin's price history, using two moving averages to predict market overheating. Historically, when the shorter 111-day moving average crosses above the 350-day moving average, it signals a potential peak. Currently, Bitcoin's price is consolidating below twice the 350-day moving average, around $76,000.

Similar patterns occurred in 2017 and 2020, when Bitcoin paused below this level before breaking to new highs. Some analysts believe the current consolidation phase is within historical norms, and many traders expect Bitcoin to soon break through $71,000, targeting prices as high as $82,000. This pattern suggests that Bitcoin is on the verge of a new rally rather than the end of the bull market.

2. Stablecoin Inflows and Market Sentiment

Another key factor indicating potential further increases is the reflow of stablecoins into the cryptocurrency market. Stablecoins typically serve as an entry point for Bitcoin trading and saw a sharp decline earlier this year. However, recent data shows a rebound in stablecoin activity, which often aligns with bullish Bitcoin sentiment. The increase in inflows indicates that market participants are preparing for further price appreciation.

The resurgence of stablecoin demand is a strong bullish signal; when traders turn to stablecoins, it usually indicates they are ready to re-enter Bitcoin and other assets, driving prices higher. Historically, stablecoin inflows often coincide with Bitcoin breaking out of consolidation phases and entering new bull market cycles.

3. The Impact of Federal Reserve Policy and Macroeconomic Environment

One of the most important macroeconomic factors currently affecting Bitcoin's price is the Federal Reserve's monetary policy. Speculation about potential interest rate cuts could significantly boost risk assets like Bitcoin. As economic uncertainty persists, traders are increasingly optimistic that the Fed will maintain or lower interest rates.

The author believes that a Fed rate cut could trigger a substantial rise in Bitcoin, potentially pushing it above $100,000. However, this is not a certainty. Political factors may delay such a move, especially with the U.S. elections approaching. However, Trump advocates delaying rate cuts until after the elections to prevent an economic boost that could benefit the Biden administration.

Nevertheless, market participants tend to lean bullish, with some predicting significant increases if favorable monetary policy conditions arise. In this scenario, $70,000 could indeed be just the starting point for a larger bull market.

4. Potential for Short Squeeze

The current market landscape also shows potential for a short squeeze, which could catalyze prices to stabilize, not just break through $70,000. In recent months, many traders have opened short positions, betting on a decline in Bitcoin's price. If Bitcoin quickly rebounds to $71,000 or higher, it could lead to over $1.38 billion in short positions being liquidated, creating momentum for a rapid increase.

When these short positions are liquidated, traders are forced to buy back Bitcoin to cover their losses, driving prices up. This situation has occurred in past Bitcoin rallies, where sharp price movements triggered large-scale liquidations, resulting in parabolic growth in the short term.

Do You Think $70,000 is a Starting Point or an Endpoint?

Analysis suggests that $70,000 may just be the beginning of a larger Bitcoin rally, with indicators like the Pi Cycle Top showing Bitcoin is close to breaking out. Increased stablecoin inflows indicate a stronger buying intent. The Fed's interest rate decisions could further elevate prices. Additionally, the potential for a short squeeze could push prices even higher.

The author believes it is important to remember the unpredictability of the cryptocurrency market. The increasingly unpredictable U.S. presidential election on November 5 and changes in the global economy could quickly alter the situation. While signs indicate that Bitcoin may start to rise from here, certainty remains elusive. The $70,000 mark could be a peak rather than a starting point, but only time will ultimately tell us the answer.