Key Points
- Bitcoin (BTC) forms a bullish pattern, potentially signaling an upcoming altcoin season.
- Bitcoin’s strong fundamentals and potential bullish breakout could stimulate altcoin growth.
Bitcoin, the leading cryptocurrency, has developed a bullish pattern on the weekly chart, which could indicate an impending altcoin season.
The coin has created a ‘cup and handle’ chart pattern, a formation known for its rounded bottom (the cup) and a consolidation or pullback (the handle). The upper part of this pattern reached $68,837, while the handle has been in formation since March.
Bitcoin’s Pattern and Market Performance
In addition, a falling broadening wedge pattern has formed in the handle section of Bitcoin. It has found substantial support at the 50-week moving average, below which it failed to move in July.
A similar cup and handle pattern was observed in gold. It formed the cup section between September 2011 and July 2020, followed by the handle section, culminating in a bullish breakout to a record high of $2,485 this month.
Bitcoin and gold share a relationship. Larry Fink, the founder, and CEO of Blackrock, stated in a recent announcement that he perceives Bitcoin as a digital gold.
Bitcoin’s Solid Fundamentals
Bitcoin’s demand is growing as institutional investors purchase through ETFs. The Federal Reserve is expected to start reducing interest rates as early as September, potentially affecting Bitcoin’s supply following April’s halving event.
Rate cuts by the Fed could be beneficial for Bitcoin and other altcoins, as they could lead to a risk-on sentiment among investors. This could result in a portion of the $6 trillion invested in money market funds being redirected to riskier assets like stocks and cryptocurrencies.
Analysts, including Michael Saylor and Ki Young Ju, are bullish on Bitcoin, with predictions that the coin’s value could rise significantly in the coming years.
Impact on Altcoin Season
A strong bullish breakout from Bitcoin could potentially trigger another altcoin season. Historically, altcoins, including meme coins, have performed well when Bitcoin’s value is on the rise.
For instance, altcoins such as Solana (SOL), Cardano (ADA), and Polygon (MATIC) experienced significant highs when Bitcoin reached its record peak. Recent performance data also indicates that meme coins tend to outperform larger coins during an altcoin season.
Traders often favor meme coins due to their low prices compared to Bitcoin. These coins also tend to be highly volatile and have a high trading volume.
