A new all-time high for Bitcoin is within reach, which aligns with the strength we anticipated in last week’s Crypto Crisp. As we have repeatedly emphasized, this quarter is primed for significant price growth due to a convergence of favorable factors. These include increased U.S. Dollar liquidity, strong seasonal trends, Chinese economic stimulus, and the post-fourth Bitcoin halving phase, which has historically led to substantial returns. Additionally, the growing likelihood of a Donald Trump victory, which we view as highly positive for crypto, and a market environment that thrives on low interest rates. These reasons were likewise discussed in Crypto Moves #42.

That said, we believe it is necessary to reduce some of the excess open interest in the Bitcoin futures market before prices can see another leg up. This applies both to futures on native crypto exchanges and CME’s Bitcoin futures. In our view, the market is becoming overly enthusiastic and speculative at the moment.

This situation feels similar to three weeks ago, as we discussed in a previous edition of Crypto Crisp. At that time, the market also experienced high levels of open interest, followed by a short-term dip triggered by Iran’s missile attack on Israel. Now, nearly three weeks later, following a recent drone attack on Israeli Prime Minister Benjamin Netanyahu’s residence by Hezbollah this past Saturday, we believe Israel is poised to retaliate against Iran. Just like three weeks ago, we think this geopolitical event could act as a catalyst for a short-term pullback, allowing the market to shed some of its speculative excess. Afterward, we expect Bitcoin to resume its upward momentum.

While we are short-term bearish, it is important to remember that the overall trend in the crypto market remains bullish.