Bitcoin, the world’s largest cryptocurrency, has seen its value drop by nearly 15% from its yearly high of around $31,000 due to regulatory crackdowns on Coinbase and Binance and the Federal Reserve’s hawkish forward guidance. Despite this, Bitcoin (BTC) is up 60% year-to-date and has held above a technical support level of $25,000.

There are several reasons why a new bull cycle could be on the horizon. The next Bitcoin halving is scheduled for April 2024. This preprogrammed event cuts the cryptocurrency’s supply rate by half every four years. The previous three Bitcoin halvings in 2012, 2016, and 2020 have all preceded massive BTC price rallies and new all-time highs. For example, BTC has risen by 276% since the previous halving in May 2020. Analyst Lark Davis predicts that the market will likely be in an accumulation zone until the halving. Davis believes that Bitcoin will test its record high of $69,000 in the next 18 to 24 months. One analyst even sees the price hitting $160,000 by April 2024.

BlackRock, an investment firm that manages $8.5 trillion in assets, has applied for a Bitcoin exchange-traded fund (ETF) with the United States Securities and Exchange Commission (SEC). BlackRock has a near-perfect ETF approval record with the SEC, and the deadline for the SEC to respond to BlackRock’s application is around March 2024, a month before the halving. Several analysts argue that if the SEC approves BlackRock’s application, it could double Bitcoin’s bullish prospects after the halving.

Shift from Altcoins to Bitcoin

The recent SEC crackdown on Binance and Coinbase has left many top altcoins under stress, particularly those deemed “unregistered securities.” As a result, capital is moving from altcoins to Bitcoin, as the latter is not considered a security by the SEC. Therefore, BTC may be seen as the “safe” bet when compared with the 60-plus cryptocurrencies deemed securities by the regulator. MicroStrategy co-founder Michael Saylor has predicted that this shift will push BTC’s market cap to 80% of the total crypto market in the coming years. Saylor believes that “regulatory clarity is going to drive Bitcoin adoption by eliminating the confusion & anxiety that has been holding back institutional investors.”

Technical Indicators

Technical analysis shows that Bitcoin is painting a clear bull flag pattern on its longer-timeframe charts, indicating an upside continuation of its overall recovery rally. A bull flag gets resolved after the price breaks above its upper trendline and rises by as much as the height of the previous uptrend. As a result, Bitcoin’s bull flag target comes near $35,500, a level that served as strong support in May 2021 and May 2022.

Bitcoin will need to close decisively above $35,500 to begin a bull cycle, given that it would still be a lower high compared with the cryptocurrency’s previous bear market peaks. However, BTC price could be on the cusp of a breakout in its prevailing inverse-head-and-shoulders (IH&S) pattern, as shown below. An IH&S is a bullish reversal pattern, confirmed by the formation of three troughs under a common neckline resistance. The middle trough comes to be deeper than the other two, which have more or less the same height. As a rule, an IH&S pattern is resolved after the price breaks above the neckline and rises by as much as 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. Thus, a rebound from the IH&S neckline could have BTC price rally toward $40,500, up more than 60% from current price levels and confirming a new bull cycle.

Despite the recent regulatory crackdowns, Bitcoin has held strong and is up 60% year-to-date. The upcoming Bitcoin halving and BlackRock’s ETF application are indicators that a new bull cycle could be on the horizon. Furthermore, the recent shift from altcoins to Bitcoin and technical indicators suggest that BTC could rally toward $40,500, confirming a new bull cycle.

Analysis

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