Bitcoin: Incremental, Not Exponential Gains

Traders are still not fully convinced that bitcoin is in a long-term uptrend, despite evidence to the contrary. Let's take a brief look at how BTC price action has been developing over the past several months.

One Year On From The Lows

Over the past year, since the bear market low in November 2022, bitcoin has posted steady gains. The price has oscillated within a channel for most of this time, and BTC has not put in any of the parabolic moves for which it is so well known.

This kind of steady, incremental gain is characteristic of the early phase of the new bull market. Traders are kept guessing: Is this really a long-term uptrend, or is it just a bear market rally that will ultimately give up its gains and lead to new lows?

Entering Phase 2

The uptrend has lasted a year, and it's a textbook pattern of higher highs and higher lows. There have been pullbacks, but not (yet) the 30-40% drawdowns that often occur for BTC, even in a bull market.

From the low of $15,500, BTC has stair-stepped higher, and now stands above $37,000: A gain of almost 150%. Structurally, the market is looking good. BTC is trading above the major moving averages, and at an 18-month high.

Fundamentals, too, are looking strong. Network health is exceptional, and there's the prospect of a spot ETF approval in the near future, probably by January 10. At this point, it should be clear to almost everyone that this is not a bear market rally. Traders are starting to come around to the idea that this trend has legs.

What Next?

The ETF deadline of January 10 is a magnet for traders' expectations. If bitcoin continues rising at the same rate, it could hit $42,000 by then, less than 8 weeks away, although it's possible that the SEC will give its decision before then.

Having posted steady gains for a year, it will soon be time for BTC to enter the next phase of the bull market. As before, growing optimism could bring new money in. An ETF approval would be a natural catalyst for that.

If this cycle runs like previous ones, there could be another two years left before the market peaks. Alternatively, the ETF could push BTC into a new pattern, leading to a "left-translated" cycle, in which rapid gains mean a quicker peak, followed by a longer bear market. This is a scenario that cycles trader Bob Loukas has discussed at length.

Despite traders' uncertainty, price action has been steady and predictable so far. That might be about to change.

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