Bitcoin’s Resilient Rally in 2023

The potential approval of a spot Bitcoin ETF is seen as a positive catalyst, but technical obstacles, like a double-top pattern, could pose challenges.

The price of Bitcoin (BTC) exhibited robust performance in 2023 due to the convergence of multiple factors. Beginning the year fundamentally undervalued, the coin encountered numerous headwinds in 2022, including the demise of FTX and Terra.

Bitcoin benefited from renewed expectations of central bank easing, spot ETF approval, and the impending halving, in addition to its lower valuation.

In 2023, its price increased by nearly 160%, representing its most robust performance in years.

In the future, analysts are optimistic that Bitcoin will continue to advance. In addition, data released the week prior indicated that the PCE, the preferred inflation gauge of the Federal Reserve, declined in November and is approaching the 2.0% objective.

The Fed Rate Monitor, therefore, anticipates that the initial rate reduction will commence in March of the following year.

During dovish Fed policies, BTC and other high-risk assets, such as technology equities, tend to perform well.

The anticipated approval of a spot Bitcoin ETF by the Securities and Exchange Commission (SEC) within weeks or months is an additional positive catalyst.

According to some analysts, this may occur in January. For BTC’s price increase to persist, it must surmount a significant technical obstacle.

Bitcoin’s Technical Challenges Ahead

At its year-to-date peak of $44,500, BTC has developed a double-top pattern, as illustrated below. This pattern typically culminates in a pessimistic breakout.

Upon this occurrence, the subsequent level worthy of observation will be $36,000, a significant decrease from the present level of $42,760. This viewpoint will be deemed invalidated should BTC surpass its year-to-date peak of approximately $45,000.

Some of the highest-performing cryptocurrencies will begin to unwind if this forecast materializes. Coins such as Solana (SOL), Avalanche (AVAX), VeChain, and MATH, which have performed well during the current altcoin season, are the most vulnerable.

Generally speaking, altcoins tend to imitate BTC. As an illustration, most of them attained their utmost value in 2021, when Bitcoin soared to more than $67,000. They also experienced a severe crash in 2022, when Bitcoin fell below $15,000.