Bitcoin (BTC) appears poised for a major rally towards $78,000 in the coming weeks, driven by price chart technicals and China’s recent stimulus measures.
Central Bank Liquidity Will Drive Bitcoin Demand: Analyst
On September 24, the People’s Bank of China (PBOC) announced that it would cut the reserve requirement ratio (RRR) by 0.50 percentage points, injecting about $140 billion of liquidity into the financial system.
The People’s Bank of China (PBOC) has cut borrowing costs and relaxed property purchase rules in an effort to revive the struggling property market and the overall economy.
Jamie Katz, senior cryptocurrency analyst at investment management firm Real Vision, argues that China’s latest stimulus package will be bullish for Bitcoin, and he notes that other central banks are likely to follow suit.
“Global central bank liquidity has bottomed out this cycle. Just sit back and watch other central banks lining up,” he added.
“In a credit-based fiat fractional reserve system, value decline is a feature, not a bug.”
BTC/USD vs. Big Four Central Bank Balance Sheets. Source: Jamie Coutts
The PBOC’s recent stimulus announcement was preceded by a massive rally in riskier assets such as Bitcoin, for example, the PBOC injected $367.7 billion via reverse repo in October 2023 and $140 billion by cutting the RRR by 50 basis points in January 2024.
Bitcoin price rises more than 100% since stimulus package announced
BTC/USD Daily Price Chart ft. China Stimulus. Source: TradingView
What’s interesting is that the direct link between liquidity in China and Bitcoin has become less clear since China banned cryptocurrency mining in 2021.
But as Kutz points out, Bitcoin’s performance is still closely tied to global liquidity conditions, and China’s easing measures could trigger a broader shift in risk appetite.
Technical Analysis: Bull Flag Breakout Expects $78,000
In addition to the bullish outlook, a bullish flag pattern has formed on Bitcoin’s long-term chart.
The bull flag pattern occurs when prices consolidate within the range of a descending channel after a strong uptrend. The pattern is usually resolved when prices break the upper trendline and rise to the level of the previous uptrend.
relevant: ‘History Suggests It’s Time for Bitcoin to Break Through’ – Rekt Capital
As of September 24, BTC price was testing the upper trend line of the flag for a possible break above $78,000, which would be a new all-time high.
BTC/USD daily price chart. Source: TradingView
Conversely, if a pullback occurs from the upper trendline, the price will likely decline to the lower trendline, which will likely coincide with the 0.0 Fibonacci corrective trendline at around $5.
As Cointelegraph reported, taking inflation into account, BTC would need to hit well over $80,000 to reach a new all-time high.
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