Bitcoin traders might be upbeat about what lies ahead. However, looking at the daily chart, the world’s most valuable coin is struggling for momentum. BTC prices are inside a narrow range, with support at around $56,000 on the lower end and a stubborn liquidation level at $63,000.
Even though the uptrend remains, at least considering the state of price action in the past few trading days, conservative and risk-on traders are now on the sidelines.
It is only when there is a clear trend definition, either below $50,000 or above $72,000, that traders can commit. The result will be an uptick in trading volume, currently muted and way below the averages recorded on August 8.
Is Bitcoin Preparing For A 5X Surge?
While there is caution, one analyst, in a post on X, thinks Bitcoin could be preparing for a major leg up in the coming sessions. Notably, the confident trader compares the current state of affairs to events of 2020 when the global economy came to a standstill due to the COVID-19 pandemic.
Governments had to intervene through lockdown and interest rate cuts, which fell to multi-year lows in the United States and globally.
The analyst says that, at spot rates, Bitcoin is precisely where it was in September 2020. Though prices temporarily fluctuated, it only took five short months for prices to expand from $10,500 to over $56,000.
Even though history may not repeat itself as it did in 2020, it can rhyme. Therefore, there is nothing, considering the current market conditions, that may prevent prices from rallying, even surging by 5X.
Interest Rates Cut And Politics As Key Drivers
Through 2020, the United States Federal Reserve slashed rates, meaning the accommodative monetary policy forced capital to Bitcoin, lifting prices to nearly $70,000 in November 2021. Dropping interest rates was a key driver of BTC demand.
Analysts expect the central bank to ease in September now that inflation continues to fall towards the benchmark 2% in the United States. This, in turn, creates a very favorable environment for safe havens, mainly Bitcoin.
Additionally, as politicians change their stance on crypto, endorsing the technology, the result of the November 2024 election will likely have a massive bearing on the industry.
Kamala Harris and Donald Trump have already expressed plans to support crypto assets. However, Trump has been more aggressive of the two, saying his administration would even consider adding Bitcoin as a strategic asset, similar to gold.
Feature image from Pexels, chart from TradingView