Summary I am upgrading BTC-USD to a 'strong buy' as Bitcoin decisively broke all-time highs, overcoming bearish technical signals and strong resistance. Bullish momentum is reinforced by weakness in the U.S. Dollar Index and limited upside in the S&P 500, favoring capital rotation into cryptocurrencies. Potential risks include a bearish Deep Crab pattern and political uncertainty around the U.S. strategic cryptocurrency reserve, but these are not my base case. I will reconsider my outlook if Bitcoin falls below $106,140, but current sentiment and technicals support further upside in the near term. When I last covered Bitcoin USD ( BTC-USD ) on March 2nd, 2025, with my article “Bitcoin: I Was Wrong”, cryptocurrency prices were beginning to lose some of the luster that was present following President Donald Trump’s public comments suggesting that he intended to become the world’s first cryptocurrency President . Of course, these were not just words, there were real actions supporting the bullish long-term cryptocurrency outlook in the United States . Of course, these are deeply positive scenarios for anyone holding large-cap cryptocurrencies, and BTC-USD prices have responded in kind. Since my last analysis was developed, BTC-USD has actually gained by more than +13% even while the S&P 500 has encountered losses of -1.81%. But the story is a bit more complicated than that because bitcoin prices have actually been on a bit more of a roller coaster ride than those somewhat subtle gains might imply. Given bitcoin’s ability to recover losses and form a base at elevated levels, I am raising my rating outlook to a “strong buy” while this newest rally is still in its earliest stages. Bitcoin: Substantial Two-Way Reversals (Income Generator via TradingView ) First, let’s quickly define the most recent “rally” because there are definitely elements of the bitcoin trend that seem to contradict this outwardly bullish assertion. As we can see in the chart above, BTC-USD actually continued to drop (by about -22%) after my prior pessimistic article was published. As a result, I suppose that you could say I was “right” about being “wrong” but market prices quickly reversed into the positive direction after falling below $75,000. This reversal is essentially the main reason I will have to eat some crow with my analysis update today because the bullish trend wave was forceful enough to generate gains of nearly 48% and break above an all-time high resistance level in the process. Bitcoin: Significance of Recent Breakout (Income Generator via TradingView ) When discussing these events with my own trading group, I described the price action of the last few days as being a textbook example of a consolidation zone. Whenever you are dealing with the test of an all-time high (especially when dealing with a high-volume and highly volatile trading asset), the general expectation is that selling pressure is likely to start building as prices continue moving upward. Unfortunately, this can occur either as short-sellers begin to emerge near a critical resistance zone or as bullish cryptocurrency investors start to take profits on prior successful trades. Bitcoin prices, however, really did not experience very much of this type of price action. Almost like a snake hiding in the grass and waiting to strike its prey, BTC-USD prices hovered just below the triple-top resistance region near $107,355 (as well as the +2 standard deviation on the shorter-term time frames). When we did not see any significant pullback from the $107,355 level, I immediately flipped bullish because there were two different negative technical signals (bearish triple-top resistance pattern and the movement of prices into the +2 standard deviation) and neither of them were having much of an effect. Bullish volumes were also rising quite sharply right into this resistance level, and all of this essentially provided a perfect storm of bullish elements that allowed buyers to overcome sellers and print a new record high. Bitcoin: Comparative Trends in U.S. Dollar Index (Income Generator via TradingView ) In order to get a better sense of where cryptocurrency trends are actually headed next, I think it might be important to assess relative performances in peripheral asset classes. As the world’s reserve currency , trends in the U.S. Dollar are often best assessed using the U.S. Dollar Index, and we can see some interesting developments for the greenback when looking at the daily timeframe. Specifically, we can see that the U.S. Dollar Index recently invalidated prior trend momentum readings in the Relative Strength Index ((RSI)) near the beginning of this month. However, upside follow-through has been lacking, with the RSI breaking back below the daily exponential moving average (EMA). In the chart above, this activity is shown with the purple line in the indicator panel falling under the yellow exponential moving average. Importantly, share prices themselves are also trading back below all four major exponential moving averages (20-day, 50-day, 100-day, and 200-day periods) and this gives us a bearish confluence of events that seems to contradict the negative momentum break that was experienced earlier this month. As a result, our next downside price target for the U.S. Dollar Index is not seen until 97.921 (April 21st, 2025 lows). Overall, I expect this to have a positive BTC-USD impact in terms of price action - at least until major support in the U.S. Dollar Index is retested (and confirmed to hold). Bitcoin: Comparative Trends in S&P 500 (Income Generator via TradingView ) Another major peripheral asset that cryptocurrency trades should be watching would be the S&P 500 itself. At this stage, it is probably becoming irritating for many investors to listen to stock pundits talk about the potential for cryptocurrencies to become safe-haven assets . But if this characterization is actually an accurate characterization of the market majority, it might be reasonable to suggest that declining momentum in the S&P 500 could actually become beneficial for bitcoin investors. Based on the chart above, bullish BTC-USD arguments can be made right now, due to the fact that the S&P 500 has already failed at resistance following the sizable rallies that emerged after the crash into $4,835.04 in early April. Of course, the May 19th price highs at $5,968.61 rests less than 3% below the S&P 500’s all-time high of $6,147.43. For all of these reasons, I think it is very difficult to make the argument that the S&P 500 has a great deal of upside potential when the benchmark has already recovered most of the losses that have been experienced since January 31st, 2025. Bitcoin: Potential Bearish Signals (Income Generator via TradingView ) If we do believe that the potential for upside is limited in both the U.S. Dollar Index and S&P 500, where would we then expect investors to start flocking next? Small-cap stocks might be one possibility, perhaps treasuries might be another (especially given the long-term complexities of the current market environment). However, if broader selling pressure in DXY and the major U.S. stock benchmarks is not far away, bullish cryptocurrency investors really needed to see a break of important resistance levels in BTC-USD. This week, this did occur as the time-tested flagship cryptocurrency broke through prior all-time highs, but I will also mention potential risks to the positive outlook. In the chart above, we can see that even though historical resistance zones have been invalidated, cryptocurrency prices are still trading outside the +2 standard deviation and a bearish harmonic pattern has developed after the rally from just above $102,105 on May 19th. Specifically, this is a bearish Deep Crab pattern, and it is large enough to suggest that BTC-USD prices could fall back below $100,500 if the pattern reaches a full point of completion (which does not occur in a large majority of instances). We must also be aware of the fact that there has been a great deal of criticism with respect to the viability of President Donald Trump’s strategic cryptocurrency reserve, so much so that a BBC News article actually used the term “ pig in lipstick ” to describe Trump’s plans for a cryptocurrency future. Of course, if these criticisms turn out to be accurate, I think we might see the U.S. government reconsider efforts to operate the strategic cryptocurrency reserve under the next administration. Unfortunately, any financial news headlines centered in this direction would likely be accepted unfavorably by the cryptocurrency market, and I think that this is the type of event that could lead to the next crypto winter (if these types of events actually materialize). Of course, there are a lot of unknowns here and that negative scenario is not my base case right now. Ultimately, I think that the recent breaks of important resistance levels suggests that market sentiment is actually quite healthy and that the influence of short-sellers is diminishing in size. For all of these reasons, I am upgrading my BTC-USD outlook to a “strong buy” rating and I will reconsider my outlook if we see bitcoin fall below $106,140 (near-term pivot lows recorded during the May 21st trading session).
