Bitcoin’s recent upward trajectory has captured the attention of traders and investors worldwide, especially after breaking past the pivotal 50-day simple moving average (SMA) and hinting at a bull cross with the guppy multiple moving average (GMMA) indicator. These technical signals suggest momentum is on Bitcoin’s side, with analysts like CoinDesk’s Omkar Godbole forecasting a rally that could propel the digital currency to a staggering $120,000. However, as Bitcoin enthusiasts remain hopeful, several factors could potentially derail this optimistic outlook. Let’s delve into these challenges.
BTC Approaching Bull Fatigue Zone
Bitcoin’s journey towards new heights isn’t without potential stumbling blocks. The cryptocurrency is closing in on a zone of ‘bull fatigue’ around the $115,000 mark. Historical data since July shows that Bitcoin’s bullish momentum has often waned near this level. This is evident from the long upper wicks on the monthly candles, suggesting that while the bulls have been able to push prices to record highs above $124,000, strong selling pressures have consistently forced the price back below $115,000. This pattern indicates a critical resistance level and possible buyer hesitation.
Investors should be wary of this zone as previous attempts to surpass it have met with significant resistance, leading to price corrections. The market’s ability to break through this zone will be a crucial test of Bitcoin’s current rally strength.
The Dollar’s Dance with Fed Rate Cuts
Another factor that could temper Bitcoin’s rise is the U.S. dollar’s behavior in response to anticipated Federal Reserve rate cuts. With the U.S. labor market softening, futures traders have priced in 70 basis points of rate cuts by the end of the year. This dovish outlook contrasts sharply with the stances of other central banks like the European Central Bank, which seems to have moved past the era of rate cuts.
Despite these expectations, the dollar index, which measures the dollar’s value against a basket of major currencies, has remained relatively stable, hovering between 97.00 and 98.00. This stability suggests that the dollar may have already priced in the expected rate cuts. The dollar’s recent resilience could pose a challenge for Bitcoin and other dollar-denominated assets. A rebound in the dollar could cap gains in Bitcoin, especially if it signals a shift in market sentiment away from riskier assets.
Notably, the Bollinger Bands—a technical analysis tool indicating volatility—are at their tightest since March 2024. This suggests a significant move in the dollar’s value may be imminent. Should the move be bullish, it could spell trouble for Bitcoin’s upward momentum.
Generational Bullish Shift in 10-Year Yield
The third element that could hinder Bitcoin’s ascent is the expected shift in the 10-year Treasury yield. While traders anticipate rate cuts that could potentially drive a decline in the 10-year yield, longer-term charts hint at a generational bullish shift in momentum for yields. This shift suggests that the downside for yields could be limited, possibly curbing the anticipated influx of capital into riskier assets like Bitcoin.
Since the coronavirus pandemic, the 10-year yield has risen sharply, marking the end of a four-decade downtrend. This shift has been accompanied by a realignment of the 50, 100-, and 200-month moving averages in a bullish formation, reminiscent of the 1950s’ onset of a multi-decade yield rally. A similar situation exists for the two-year yield, which is more sensitive to interest rate expectations. This generational shift could maintain the attractiveness of fixed-income instruments, potentially dampening Bitcoin’s appeal.
In conclusion, while Bitcoin stands on the precipice of a potentially historic rally, these factors underscore the importance of caution. Traders and investors should keep a close eye on Bitcoin’s behavior around the $115,000 resistance, the dollar’s response to Fed rate cuts, and the dynamics of the 10-year Treasury yield. The interplay of these factors could significantly influence Bitcoin’s path in the coming months. As always, the volatile nature of cryptocurrency markets means that nothing is set in stone, and all predictions should be approached with a healthy dose of skepticism.
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
