Bitcoin rallied by 6% on Friday and reclaimed $80K as crude oil prices slipped below $100 per barrel. This eased fears of oil-driven inflation, sparking a strong rebound across U.S equity and crypto markets. For Fidelity, however, BTCs resilience also meant that it might be ready for its next bull market cycle run.
Why Fidelity thinks Bitcoin winter is over
According to Jurrien Timmer, Fidelitys Head of Global Macro, BTC has held above $60K for about a year.
For him, two signals have been flagged – The 1-year Bitcoin winter and BTC/gold correlation turning positive. Timmer said that these signals confirm a durable bottom and potential early innings into the next bull cycle run.
That‘s how long a typical Bitcoin winter lasts (1 year), so I’m sensing that a new 4-year cycle bull market is underway.
Source: Fidelity
He added that the market is now in a ‘new secular regime of higher cost of capital.’ He is expecting the government to respond with ‘financial repression.’ In other words, the government will do anything possible to contain the rising bond yields, including printing money.
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Put differently, the inflation from U.S government intervention could trigger demand for scarce assets like Bitcoin and gold.
Interestingly, Timmers macro bullish outlook for BTC also seemed to align with technical indicators on the price charts.
Bitcoin reclaims key bull market cycle level
Bitcoin‘s Friday move effectively closed above the 50-week Moving Average (MA). Here, it’s worth noting that a true breakout could be confirmed if the weekly candlestick also closes above the level.
Analysts, including Galaxy Researchs Head of Research Alex Thorn, have been tracking this level to gauge the end of the bear market and the start of the next bull market run. Notably, a previous attempt to break above the 50-week MA was rejected in early September.
Reacting to BTCs 6% surge on Friday, Thorn noted,
BTC is looking strong here as it trades over the 50-week moving average. Move looks real.
Source: BTC/USDT, TradingView
Trader Bob Loukas also echoed a similar bullish position, noting that clearing the May high of $82K could push BTCs price to above $90K.
Very good setup here for Bitcoin to smash through the May highs and confirm a new bull market.
However, he cautioned that failure to clear $82K could open another possibility of retesting the lows around $60K. And even in such a downside scenario, the 200-day MA and BTC short-term holder (STH) realized price (at $71K) would be expected to act as support levels.
Source: Deribit
That said, institutional traders are currently betting on a 35% chance that BTC will reclaim $90K by December. However, for the $100K-psychological level, the chances have dropped to 18%.