Bitcoin rally likely to fizzle out, based on recent patterns

Bitcoin jumped on Thursday, but if recent history is anything to go by, this surge will not last. 

The apex crypto hit its all-time high of over $73,000 six months ago. Since then, it has been stuck in a frustrating cycle, hitting lower highs while major markets have surged.

Stocks are at record levels, both U.S. presidential candidates have spoken positively about crypto, and the Federal Reserve cut interest rates for the first time in 4 years.

Yet Bitcoin’s price hasn’t responded. Wolfe Research’s Rob Ginsberg summed it up perfectly: 

“If you had told us in March that the S&P would be north of $5700, we would have assumed BTC would be flirting with $100,000. Instead, it has been just the opposite. While the market has climbed to new highs, crypto has been in a bear market since March.”

A bleak outlook 

Bitcoin is currently down 13% from its ATH, while Ether has dropped by 34%. In contrast, the S&P 500 has gained 11%, and gold is up 22%.

Even with a 50% year-to-date gain, Bitcoin’s performance has been underwhelming compared to expectations. 

Traders have been holding out for a massive surge, banking on factors like the popularity of Bitcoin ETFs and bullish macros.

Historically, post-halving highs don’t usually appear until 18 months later. So there’s still hope, but it’s dwindling.

While October and November are historically good months for Bitcoin, with potential seasonal upside, the market remains unsure.

Investors are waiting for the dust to settle post-election before making any big moves.

Regulatory uncertainty continues to weigh on Bitcoin

Meanwhile, regulation remains a thorny issue too. SEC Chair Gary Gensler reiterated on Thursday that Bitcoin is not a security, saying that: “As it relates to Bitcoin, my predecessor and I have said, that’s not a security. You now have a way that you can actually express that view—buy into that through exchange-traded products.”

Gensler’s comments came in response to a question from CNBC’s Joe Kernen about whether he was warming up to top-tier crypto. He deflected, asking: “Where are you on what’s called altcoins, there’s 15 or 20 thousand of them. Where are you, Joe?” 

He also refused to comment on Donald Trump’s idea of maintaining government-held Bitcoin as part of a strategic national stockpile, saying: “I have a view, but given my role and also we are in election season, so for the listening public, I will stick to my chalk lines which are securities markets, and Chairman Powell and others can speak to that.”

This is not the first time Gensler has dodged questions about altcoins.

Despite industry pushback, lawsuits, and a recent grilling the agency received during a congressional hearing, Gensler remains adamant that most tokens other than Bitcoin fall under his jurisdiction as securities.