Bitcoin Price Analysis: Why These Two Patterns Are Key for the Next Bull Market

Bitcoin (BTC) has long been known for its volatile price movements, often rallying or dropping significantly within short periods. These price swings are influenced by various economic factors, including inflation concerns, retail data, and Federal Reserve policies.

However, two key price patterns have historically been associated with Bitcoin’s most significant rallies, patterns that have led to gains of 50% or more in just a few weeks. In this article, we'll explore these patterns and analyse why they could signal the next Bitcoin bull market.

The Role of Low Leverage and Bullish Retail Data in Bitcoin Price Rallies

One of the most significant factors behind Bitcoin’s price rallies is the combination of low market leverage and bullish retail data. When Bitcoin's leverage in the market is low, it often signals that investors are cautious and are not overly exposed to risky positions.

This lack of leverage creates a stable foundation for a price increase because it means there’s less liquidation of positions when the price rises, allowing the asset to rally more smoothly.

A prime example of this can be seen in early 2024 when Bitcoin’s price surged from $40,000 to $73,500 in just seven weeks. This rally was partly driven by a low perpetual futures funding rate of just 4% per year.

In addition, the U.S. retail sales data for December 2023 exceeded expectations, rising by 0.6% month-over-month, further fueling optimism in the market. This combination of low leverage and strong retail data helped Bitcoin gain momentum, marking a pivotal point in its price trajectory.

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The same pattern was observed in January 2023, when Bitcoin saw a 50% increase in price between January 3 and February 20. At the time, Bitcoin had been consolidating below $18,000 for several months, and leverage demand was minimal.

However, once the retail sales data for January 2023 exceeded expectations by a large margin, and the market adjusted to the Fed's tightened stance on monetary policy, Bitcoin quickly shifted into a bullish trend.

These events highlight how the alignment of strong economic data with low leverage can signal a potential Bitcoin rally.

The Impact of Federal Reserve Policy Expectations on Bitcoin Price Movement

Another critical pattern that influences Bitcoin's price movements is the shift in expectations regarding U.S. Federal Reserve policy. Bitcoin has historically seen significant price increases when the Fed signals that its policies will not be as aggressive as initially expected.

For example, during the latter half of 2021, Bitcoin experienced a 76% price surge from July 20 to September 7. This rally came after market sentiment had been dampened due to a previous price decline, but the situation quickly reversed when the Fed announced intentions to reduce asset purchases to curb inflation.

Fed Chair Jerome Powell's speeches and actions, particularly those related to tightening monetary policies or reducing interest rate cuts, play a significant role in how Bitcoin performs.

When the market perceives that the Fed is becoming less aggressive with its rate hikes, Bitcoin often sees an uptick in price, as traders look for more favourable economic conditions. A drop in interest rate expectations, combined with low leverage and strong retail sales, has historically created ideal conditions for a Bitcoin bull market.

Looking ahead, the market is awaiting key speeches from Powell, including one scheduled for June 18, 2025, following the Fed's decision on interest rates. Monitoring these speeches and the broader economic data will be essential for determining the likelihood of a Bitcoin rally soon.

How These Two Patterns Set the Stage for the Next Bitcoin Bull Run

When both of these patterns—low leverage and favourable retail data—align with dovish Federal Reserve expectations, Bitcoin has historically entered a bull market phase. These patterns signal to traders that the economic conditions are ripe for price growth.

Traders and investors are less likely to be caught off guard by market corrections or price dips, as they are already anticipating upward momentum.

Looking ahead, there are several important events and dates that could trigger the next Bitcoin price rally.

These include the release of U.S. retail sales data for May and June, scheduled for June 17 and July 15, respectively, and the Jackson Hole Economic Symposium in late August. These events could provide crucial insights into the direction of U.S. economic policy, which in turn will influence Bitcoin’s price.

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Conclusion: Bitcoin's Future Looks Bright with These Key Patterns

In summary, Bitcoin price rallies are frequently associated with two critical patterns: low leverage in the crypto market and strong retail data paired with easing Federal Reserve policy expectations.

When these patterns align, Bitcoin’s price often experiences significant gains, sometimes rising by as much as 50% or more within a few weeks. As we move further into 2025, investors should keep a close eye on these signals, as they have historically preceded some of Bitcoin’s most substantial bull markets.

FAQs

1. What causes Bitcoin to rally so dramatically?

Bitcoin often rallies dramatically when key factors align, such as low leverage in the market and strong retail sales data, combined with expectations that the Federal Reserve will not be as aggressive with rate hikes.

2. How does low leverage impact Bitcoin's price?

Low leverage means that investors are less likely to be liquidated when prices rise, providing a more stable foundation for the price to increase steadily.

3. When can we expect Bitcoin’s next bull market?

The next Bitcoin bull market could be triggered by upcoming key events such as speeches from Federal Reserve officials, retail sales data, and broader economic signals indicating a favorable environment for risk assets like Bitcoin.