Bitcoin’s Bullish Potential Amid Rising Inflation
Recent historical trends associated with a crucial indicator suggest that Bitcoin (BTC) may have substantial upside potential as renewed inflation in the U.S. poses challenges to the current bullish trajectory. At the time of writing, the 200-week simple moving average (SMA) of Bitcoin’s price, which effectively smooths out short-term market volatility to present a clearer view of the overall trend, was recorded at $44,200, according to data from TradingView.
While this average is at an all-time high, it remains significantly below the previous bull market peak of $69,000 that was reached in November 2021. This discrepancy may serve as an important indicator, as historical data reveal that bull markets typically conclude with the 200-week SMA approaching the record prices set during the preceding bull run.
For instance, the last bull market came to a close in late 2021, with the 200-week SMA climbing to $19,000, aligned with the peak established in the 2017 bull market. Similarly, the 2017 bull market concluded in December of that year, with the 200-week SMA rising to over $1,200, which was the record price set four years prior.
If historical patterns hold, Bitcoin’s current trading range between $90,000 and $110,000 is likely to resolve in a bullish manner, setting the stage for a significant upward movement in the near future.
Analyzing BTC’s weekly chart alongside the 200-week SMA illustrates this potential. Additionally, the pricing of options on Deribit further supports the optimistic outlook suggested by the 200-week SMA. According to data from Amberdata, options with expirations extending three months or longer indicate that call options are priced higher than put options, reflecting a market expectation of increasing prices.
Moreover, a considerable portion of the open interest is concentrated in call options with strike prices that exceed BTC’s current market price of $96,700. Notably, the call option at the $120,000 strike has emerged as the most popular, boasting a notional open interest exceeding $1.8 billion, which underscores the prevailing bullish sentiment within the market. Open interest refers to the number of contracts that are currently active or not yet settled.
