The Bitcoin price has fallen by 2% today, dropping to $26,757 in the past 24 hours and undermining expectations that the cryptocurrency’s recent consolidation had set it up for a breakout.
BTC’s current price means it has barely budged in the past week, although the coin has gained by 2% since reaching a low of $26,270 on May 12.
It has also risen by 61% since the beginning of the 2023, with this medium-term increase putting BTC on a path towards further recovery in the coming months.
Indeed, with some voices suggesting that the global economy will do better this year than previously forecast, bitcoin could be in a position to ride a wave of renewed optimism, particularly if the US Congress agrees a resolution to its latest debt ceiling crisis.
Where Will Bitcoin Go Next? Price Prediction as BTC Rebounds from Recent Low
While BTC has fallen today, its chart suggests that it’s in a great position to rebound.
In particular, its relative strength index (purple) has begun rising again after falling just below 30 earlier this morning, signalling a quick recovery.
Likewise, BTC’s support level (green) has survived today’s fall, implying that the cryptocurrency isn’t likely to see any further falls in the near term.
And while Bitcoin’s 30-day moving average (yellow) has yet to fall below its 200-day average (blue), the fact that its price has actually begun rising in the past hour suggests that it may not.
Of course, while Bitcoin’s relative price stability over the past couple of weeks would indicate that it may not move wildly anytime soon, there are a number of incoming developments that could provide it with the catalyst for a big movement.
Most notably, the US Congress and the White House need to agree on a resolution to the current debt crisis, with the US likely to default on its debt obligations on June 1 if some kind of answer isn’t agreed.
Such a default could be catastrophic for Bitcoin and the cryptocurrency market, even if some maximalists might assume that a weakened US dollar would play into the hands of BTC.
It could potentially intensify the recent flight to cash and away from risk-on assets such as bitcoin, causing liquidity — which is at very low levels already — to dry up even further.
However, it’s worth pointing out that the US has wrangled over its debt ceiling before, and in each case a default has been averted.
As such, the odds tend to lean more towards another resolution, even if it seems that lawmakers and the US president are leaving it to the 11th hour once again.
Improving Economic Picture
And assuming that a full-blown crisis is averted, recent signs continue to suggest that the US and global economy is gradually improving.
Recent financial reports coming out of the US have generally beaten expectations, while the Eurozone avoided entering a recession in the first quarter of the year.
While an economic recovery is likely to be gradual (and a few more rate hikes are possible), most available evidence does suggest that things are improving on the whole, rather than getting worse.
This should mean that Bitcoin will witness a gradual influx of further investment, a process likely to be accelerated by next year’s halving, which is due to take place at some point in either April or May.
As every previous halving has shown, a 50% reduction in the Bitcoin block reward tends to drive up the cryptocurrency’s price.
The effect isn’t immediate, however, with the 2020 halving not seeing a peak until November 2021.
That said, the market can expect Bitcoin to begin rising in the months prior to the halving’s completion, with the cryptocurrency potentially in line for a classic end-of-year rally.
More immediately, we could also expect BTC to rally in response to a resolution of the debt ceiling deadlock, potentially rising back up to $27,000 in the aftermath.
From there, further good economic news could lift Bitcoin back up to $27,500, $28,000 and even higher.
And given how exchange liquidity remains restricted, don’t be surprised if BTC makes a few big jumps along the way.
This article was originally published by CryptoNews.