Bitcoin is positioned for a substantial breakout toward $78,000 in the coming weeks, primarily due to price chart technicals and China’s latest economic stimulus.
Central Bank Liquidity Boost
On Sept. 24, the People’s Bank of China (PBOC) announced that it would inject around $140 billion of liquidity into the financial system by cutting the reserve requirement ratio (RRR) by 50 basis points. The borrowing costs and property purchase rules have been eased to support the struggling real estate market and the wider economy. Jamie Coutts, chief crypto analyst at investment management firm Real Vision, argues that China’s latest stimulus package is bullish for Bitcoin as it would influence other central banks to follow suit.
Current Bitcoin Price Level
PBOC’s recent stimulus package announcements have preceded huge rallies in risk assets like Bitcoin. For instance, PBOC injected $367.7 billion through reverse repos in October 2023 and $140 billion by reducing the RRR by 50 basis points in January 2024. Bitcoin’s price rose by over 100% following the stimulus package announcements. Despite the crypto mining ban in China in 2021, the connection between Chinese liquidity and Bitcoin remains strong due to global liquidity conditions.
Technical Analysis: Potential $78K Rise
Bitcoin’s technical analysis shows the formation of a bull flag pattern on the longer timeframe chart. A bull flag pattern develops when the price consolidates inside a descending channel after a strong upside move. The pattern generally resolves when the price breaks above the upper trendline and rises as much as the height of the previous uptrend. As of Sept. 24, BTC’s price was testing its flag’s upper trendline for a potential breakout above $78,000—a new record high. Conversely, a pullback from the upper trendline will likely bring the price down toward the lower trendline.
Bitcoin shows signs of a significant rise amidst China’s economic stimuli and favorable technical analysis. The impact of China’s policies could boost Bitcoin demand, potentially driving the price up to $78,000.
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