Bitcoin gears up for 'transition phase' as parabolic rise looms, trader highlights

Key Takeaways

• Bitcoin has risen 6% following the Fed's 50 basis point interest rate cut.
• Traders anticipate a potential parabolic rise for Bitcoin as it enters a "transitional phase".

Bitcoin (BTC) is up 6% since the Fed made a 50 basis point cut in the US interest rate. According to the trader known as Rekt Capital, this is the beginning of a “transitional phase” for Bitcoin to start a parabolic upward movement.

The trader highlighted that it usually takes 161 days after the halving for Bitcoin to show action. Notably, the period between the halving and the expected bullish movement is labeled by Rekt Capital as the “re-accumulation range.”

If history repeats itself, BTC should break out of this re-accumulation range in the next handful of days, the trader added. Additionally, Rekt Capital is especially bullish after BTC reclaimed its re-accumulation range, gearing up for the said transitional phase.

Is Bitcoin accelerating or hitting the brakes?

However, the current bull cycle is different from the previous ones, as Bitcoin registered a new all-time high before the halving. 

Thus, Rekt Capital claimed it accelerated the cycle, and the corrections and consolidation periods were positive for slowing down and making this cycle similar to past ones.

Despite all the brakes Bitcoin hit this cycle, its acceleration rate is still ahead in approximately 70 days, Rekt Capital pointed out. 

As a result, it isn’t clear to the trader if Bitcoin is gearing up for an upward movement next, or if another correction will happen to reduce the acceleration rate further.

A perfect storm for risk assets

Although September is usually a bad month for risk assets, macroeconomic conditions are showing a “perfect setup” for risk assets, according to Tom Dunleavy, partner at MV Capital.

Dunleavy stated that the Fed has cut rates 12 times with the S&P 500 within 1% of an all-time high. In all of these cases, the market was higher one year later, with an average return of nearly 15%.

Notably, as reported by Bloomberg, Bitcoin’s correlation with the US stock market is close to an all-time high.

“Markets are pricing in 250bps of rate cuts and 18% earnings growth over the next 12 months. Easing into a period of this sort of growth has literally never been seen before. The majority of signals we would look for in the underlying economy are neutral to expansionary (the opposite of a recession),” Dunleavy added.

Finally, the partner at MV Capital said that seasonality is immensely positive, with potential rallies in October and December.