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06 October, 2024

Bitcoin’s Bullish Breakout: What Conditions Need to Be Met?

06 October, 2024

Bitcoin Holds Steady: Awaiting Key Conditions for Breakout

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Bitcoin currently trades near the $62,000 mark, showing little movement in the past day. While it has entered a minor consolidation phase since Friday’s small gains, the cryptocurrency remains range-bound since March, according to CoinMarketCap data. While many investors anticipate a bullish breakout in Q4 2024, certain market conditions need to be met.

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Market Unease and Anticipation

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CryptoQuant analyst burakkesmeci notes that Bitcoin investors are displaying significant market anticipation, as revealed by the MVRV Ratio and CQ Bull & Bear indicators. The MVRV Ratio compares Bitcoin’s current price to its realized value, indicating whether it’s undervalued or overvalued. A reading above the 365-day Simple Moving Average (SMA 365) suggests a bullish trend, as investors see year-to-date gains. However, Bitcoin’s MVRV is currently at 1.90, hovering slightly below its SMA 365 (2.03) since July, suggesting a steady market waiting for a breakout.

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The CQ Bull & Bear indicator, which measures recent price action relative to longer-term price movements, shows a similar pattern. Since August, it has been oscillating slightly below its SMA 365 (0.46), reinforcing the notion that Bitcoin is in a holding pattern.

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Factors That Could Spark a Bitcoin Rally

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For Bitcoin to break out of its current holding pattern, burakkesmeci highlights specific events that must occur. First, the Federal Reserve needs to fully engage in a rate-cut cycle, gradually lowering interest rates. Following a 50 basis points cut in September, market experts predict another 25% cut at the upcoming FOMC meeting in November.

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Another bullish factor is an impending quantitative easing, where the US government injects liquidity into the economy. This increased liquidity is expected to encourage individuals to explore risky investments like Bitcoin.

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Current Market Conditions

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At the time of writing, Bitcoin trades at $62,009, down 0.02% in the past 24 hours. Daily trading volume is down 53.80% to $12.97 billion.

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While Bitcoin remains in a holding pattern, these indicators and potential events suggest a bullish breakout is possible, provided specific conditions are met.