Bitcoin Price Breaks Out of Risk Zone: Now What?

Bitcoin's price has shown its resilience by passing through a volatile period known as the “danger zone”.

This phase follows Bitcoin's halving event, which significantly affects its price. As it gets stronger, Bitcoin is now attracting the attention of investors.

Bitcoin's value moves from risk to accumulation.

Technical analyst Rect Capital describes the “danger zone” as the potential for volatility to decline for three weeks after Bitcoin's halving, a recurring cycle in history.

In the past, this phase has seen a decline in prices as much as 17% in 2016. However, the latest cycle experienced a modest 6.5% decline, indicating a booming market. This decline was short-lived, as Bitcoin soon rallied by 15%, confidently breaking out of the lower bound of the retracement range.

Bitcoin's resilience underlines the post-halving series cycle. Despite the expected volatility, the accumulation phase started earlier than predicted, a strong support level that investors were quick to take advantage of.

“Time wise but not – so we have to wait for a week for the confirmation of this zone to be official but at this point it is a formality,” said Rect Capital.

As a result, the market's reaction has preempted fears, suggesting that a significant price correction may be overdue.

Read more: Bitcoin Half Cycles and Investment Strategies: What You Need to Know

The broader economic environment bolsters Bitcoin's positive prospects, especially the weaker US dollar. In particular, macroeconomist Henrik Zeberg noted the recent decline in the US Dollar Index (DXY), which tracks the dollar against six major currencies.

Zeberg attributes this trend to falling yields on government bonds, creating a prime environment for cryptocurrencies.

This observation is critical, given Bitcoin's historical inversion against the US dollar. As the DXY hit a two-decade high in September 2022 amid worsening Federal Reserve policies, Bitcoin fell to $16,000. As inflation softened and the Fed's rate hikes stalled, the DXY fell 2% for the month, improving conditions for Bitcoin's rise.

“Market participants had been expecting a 75 to 100bps rate cut in 2024, but the Federal Reserve has kept interest rates steady in response to ongoing inflation. Current expectations are for a 25 to 50bps cut in Q4 2024, with the first 25bps cut following inflation data in October or November 2024.” It could take months if it doesn't get worse,” Matteo Greco, research analyst at Fineqia, told BIncrypto.

This situation is especially important since Bitcoin has more than 1 billion off-chain transactions. It is showing its growing adoption and penetration into the global financial system. Favorable macroeconomic conditions and market strength suggest that Bitcoin may see continued growth.

“1 Bitcoin is ten times more rare than 1 kilo of gold and sold for the same price. For bitcoin to overtake gold, it needs to multiply in this cycle to pass gold parity at around 10kg per bitcoin,” said Blockstar CEO Adam Teck.

Read More: Bitcoin Price Prediction 2024/2025/2030

As Bitcoin moves out of the “danger zone”, the path ahead is driven by macroeconomic trends and the potential for growth in the market's inherent resilience. With historical patterns as a guide and current economic indicators favoring cryptocurrencies, Bitcoin's post-halfway point seems set for a tough continuation.