Key Insights:
Bitcoin might repeat the 2021-like rally that could take its price to $500k.
The present market conditions indicate that the bottom has been formed and BTC is already in an oversold region.
Corporate buyers like Strategy, Metaplanet, GameStop, etc., indicate an intent to buy more rather than sell at current levels.
Finally, one of Donald Trump's latest tweet indicates that the US Fed might raise interest rates as soon as 7 May 2025.
Bitcoin has formed a price pattern that closely resembles the one formed in 2020-21, which took Bitcoin on a 500% rally. If the same pattern repeats, Bitcoin is expected to reach at least $500,000 by the end of this year.
Crypto investor Mr. Crypto drew similarities between the two chart patterns.
Bitcoin saw one of its most bullish rallies in 2020 and 2021 when its price rallied from $9,000 to $69,000 within a period of twelve months.
The chances of a similar rally taking place in 2025 are increased by the fact that even at its lowest point in the ongoing liquidity and trade war crisis, Bitcoin is firmly above its previous cycle high of $70,000 and is expected to remain above this because of the upcoming rate cut in May 2025.
In his tweet a couple of days ago, Trump indicated that a rate cut was a high possibility in May this year. Our expectations indicate a 0.25% cut, but a higher rate cut could also be in the Fed's plan.
In the short term, Bitcoin charts look extremely bearish, having broken down from a descending triangle pattern that had a support at $81,500. This breakdown has stopped near the support zone of $76,000.
Bitcoin 1D Price Charts
Tradingview
At press time, Bitcoin was slightly above this support zone and was trading around $76,900. A further breakdown from these levels is currently unexpected.
Going forward, Bitcoin is likely to reclaim $80,000 within the week, based on its RSI levels (35) and its presence in the oversold region.
However, a price recovery above $100k is only likely if the market sees a rate cut of 0.25% or higher.
A large part of Bitcoin's ability to recover above $100,000 depends on corporate buying. In the last month, corporate buyers were able to buy around $3 billion worth of Bitcoin, with the lion's share, i.e., $2.7 billion coming from Michael Saylor's Strategy.
Michael Saylor's Strategy has been a key Bitcoin buyer in the last 5 years, with the majority of its funds coming from strategic sales of its preferred shares and convertible bonds. Till date, it has purchased a net of $35 billion in BTC and has managed to obtain an yield of $5 billion despite market downturn.
It plans to buy at least $21 billion worth of Bitcoins this year by selling its preferred shares to investors.
At present, the expected liquidation price of Strategy (on a cost basis) is $67k per BTC which is almost $10k lesser than the current market price of Bitcoin. Even if it's average cost price arrives, Strategy is unlikely to sell its Bitcoins, repeating the same behavior that it showed during the crypto winter when it was in 20% negative yield.
GameStop plans to invest somewhere between $1.3 billion to $1.5 billion worth of Bitcoins this year. The company leverages its net free cash flow and its strong cash rich business to raise money via preferred shares.
The company has been sitting on a free cash flow of $4.5 billion.
Metaplanet too has been buying Bitcoins by raising money via debt. The company is a key player next to Strategy and owns 4046 Bitcoins. We estimate the average buy price for Bitcoins to be around $85k for the company, which means it could be sitting at a net negative yield of 10%.
Despite sitting on a negative yield, Metaplanet does not seem to change its strategy or sell its Bitcoins. Conversely, the company is expected to buy more Bitcoins given current attractive valuations.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.