4 factors for the next Bitcoin bull cycle.

Bitcoin (BTC) has decreased by almost 15% from its highest point of around $31,000 this year. This drop can be attributed to recent regulatory crackdowns on crypto exchanges Coinbase and Binance, as well as the Federal Reserve’s hawkish guidance. However, Bitcoin has still increased by 60% year-to-date and remains above a technical support level of $25,000. There are several reasons why a new bull cycle could begin, such as the upcoming Bitcoin halving event in April 2024. The previous three halvings have all caused massive BTC price rallies and new all-time highs. Analysts predict that Bitcoin will test its record high of $69,000 in the next 18-24 months and one analyst even foresees the price hitting $160,000 by April 2024. BlackRock’s Bitcoin ETF application to the U.S. Securities and Exchange Commission has also boosted confidence in a potential BTC price rally. Finally, capital is moving from altcoins to Bitcoin as the latter is not considered a “security” by the SEC, causing Bitcoin’s market dominance to cross 50% for the first time in two years. Technicals show that Bitcoin is painting a clear bull flag pattern on its longer-timeframe charts, suggesting an upside continuation of its overall recovery rally.

A bull flag is a pattern in which the price rises in a channel, and then consolidates in a parallel channel. The pattern is confirmed when the price breaks above the upper trendline and rises by the same height as the previous uptrend. Bitcoin’s bull flag target is near $35,500, which was a strong support level in May 2021 and May 2022.

However, Bitcoin must close above $35,500 to start a bull cycle, as it would still be a lower high compared to the cryptocurrency’s previous bear market peaks.

Interestingly, Bitcoin’s current inverse-head-and-shoulders (IH&S) pattern could also indicate a breakout. An IH&S is a bullish reversal pattern that is confirmed by the formation of three troughs under a common neckline resistance. The middle trough is deeper than the other two, which have more or less the same height.

Typically, an IH&S pattern is resolved when the price breaks above the neckline and rises by the distance between the middle trough’s lowest point and the neckline. Sometimes, the price returns to retest the neckline as support after the first breakout attempt.

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Therefore, if Bitcoin rebounds from the IH&S neckline, its price could rally toward $40,500, up more than 60% from current price levels, and confirm a new bull cycle.