Bitcoin’s Potential Bull Market Signals from the Bond Market
Bitcoin (BTC) could be entering a bull market for the next one to two years, according to MN Trading Founder Michaël Van de Poppe. Van de Poppe highlights a bearish divergence on the 2-year and 10-year T-bill yields, indicating a potential upward trend for Bitcoin.
In his analysis, Van de Poppe mentions that yield inversion occurs when short-term interest rates surpass long-term rates due to economic uncertainty. He notes a “massive weekly bearish divergence” on government bonds, suggesting market pessimism based on economic indicators.
Inflation and its Correlation with Technology
Van de Poppe suggests that the current yield trends are influenced by the Federal Open Market Committee’s (FOMC) monetary policy decisions. As the tightening practice comes to an end and November’s inflation numbers show positive results, it is good news for the Federal Reserve.
In November, inflation fell below the Fed’s annual 2% target for the first time in over three years. This has boosted market sentiment and raised expectations of rate reductions in the upcoming year. Tech stocks generally benefit from Fed cuts as they lower borrowing costs, and Bitcoin’s price has been moving in sync with tech stocks recently.
Van de Poppe also points out that a similar yield curve trend in 2018 preceded a bull market for Bitcoin, mirroring the current market trajectory.
Bitcoin Halving and Potential ETF Approval
In addition to favorable macroeconomic factors, Bitcoin is approaching its halving event in a few months. As of December, Bitcoin’s price has reached its highest level this year at around $44,000. However, it is still 37% lower than its all-time high in 2021.
Historically, Bitcoin has experienced post-halving gains. Furthermore, the potential approval of the first Bitcoin spot ETF in the new year could attract retail investors and further drive the market.
While Bitcoin’s price movement is influenced by various economic and regulatory factors, the overall direction appears promising for the next year or so.
Hot Take: Bitcoin’s Potential Bull Market Supported by Bond Market Signals and Inflation Numbers
Based on an analysis by MN Trading Founder Michaël Van de Poppe, Bitcoin may be entering a bull market for the next one to two years. Van de Poppe identifies a bearish divergence on the 2-year and 10-year T-bill yields, indicating positive prospects for Bitcoin. This yield trend is influenced by the Federal Open Market Committee’s monetary policy decisions and favorable inflation numbers in November. Additionally, historical patterns show that a similar yield curve trend in 2018 preceded a bull market for Bitcoin. With the upcoming halving event and potential approval of a Bitcoin spot ETF, the market sentiment remains optimistic. Despite various factors affecting its price movement, Bitcoin’s overall direction seems promising for the next year or so.
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