Q2 Bitcoin Outlook

Since it’s inception, Bitcoin is the best performing asset class worldwide. However, recent market turmoil and a risk off environment have led to a 30+% pullback from the all-time high of $109k achieved in 2024. Nevertheless, investors should be looking to buy the dip at these levels. Below are five reasons why:

Bitcoin Technical Analysis

Typically, in the study of technical analysis, the more signals a technician observes, the higher the probabilities of being correct. On Wall Street, we call multiple signals that align a confluence. Currently Bitcoin and iShares Bitcoin Trust ((IBIT Quick QuoteIBIT - Free Report) ) have a confluence of four distinct signals:

·       Retest of Previous Breakout Zone: IBIT is currently retesting its breakout zone from November from a seven-month base structure. A previous breakout area can act as an area of support, especially with so much “price discovery.”

·       Election Day Gap Fill: Because IBIT is an ETF, it has price gaps from overnight trade evident on the chart. Finally, Bitcoin is filling the November election day gap, an area that should act as support.

·       200-day Moving Average Tag: IBIT tagged its rising 200-day moving average for the first time in its history Monday. The first tag of a rising 200-day moving average is a zone where institutional investors tend to step up to support shares.

·       3 Corrective Waves: Elliot Wave Theory suggests that sellers may be fatigued when a stock has three corrective selling waves (with wave 3 being the deepest),

Image Source: Zacks Investment Research

Bitcoin Adoption Among Public Companies

MicroStrategy ((MSTR Quick QuoteMSTR - Free Report) ) founder Michael Saylor and his company received a plethora of flack when it added Bitcoin to its balance sheet and adopted a “Bitcoin Reserve Strategy.” That said, thus far the strategy has paid off – big time. MSTR shares are up more than 2,000% over the past five years, dwarfing the107.9% returns of the S&P 500 Index.

Image Source: Zacks Investment Research

While MSTR still has its fair share of skeptics, it has not stopped other public companies like GameStop ((GME Quick QuoteGME - Free Report) ), Semler Scientific (), and Rumble ((RUM Quick QuoteRUM - Free Report) ) from adopting a Bitcoin strategy of their own. GME and others which have just began accumulating BTC, are likely to accumulate more over time, helping to drive up the price.   

Potential Rate Cuts on the Horizon?

Late last week, Fed Chair Jerome Powell portrayed a “Hawkish” tone, signaling that he was not ready to cut interest rates and that he was concerned about the potential for tariff-induced inflation. Nevertheless, investors should not only rely on Fed speak but instead look at what the market is pricing in, because after all, it represents real-time, real money odds. The Chicago Mercantile Exchange ((CME Quick QuoteCME - Free Report) ) FedWatch Tool, an indicator that tracks the latest odds of a FOMC rate move, suggests that there will be multiple interest rate cuts in 2025 – a bullish sign for risk-on assets like Bitcoin.

Bitcoin’s Bullish Seasonality Period

Historical seasonality patterns have been extremely accurate for Bitcoin in recent years. The seasonality roadmap suggests that Bitcoin should rally into August before retreating.

Image Source: Hirsch Holdings (@almanactrader)

Relative Price Strength

During bear markets, the best thing investors can do is look for relative price strength. While the major market indices and the vast majority of stocks are below their 200-day moving averages, Bitcoin remains above it – a subtle yet powerful sign of relative strength.

Image Source: Zacks Investment Research

Bottom Line

Despite a pullback from its 2024 high, Bitcoin’s outlook for Q2 remains bright. Technical analysis indicates a confluence of buy signals, increasing adoption by public companies like GameStop suggests growing confidence, anticipated interest rate cuts provide a bullish macro backdrop, and historical seasonality is bullish.