Bitcoin 3-Year Chart Pattern Nears Breakout Point as Analyst Expects 312% ROI

Cryptocurrency

Summary:

Bitcoin could be at the precipice of another parabolic rise, which may lead to a price target of $260,000 by the end of 2024.

Bitcoin’s price is struggling to maintain bullish momentum despite moving above $62,000 for the first time in August. However, one analyst believes BTC is approaching a potential breakout that will result in six-figure prices.

“Steepest kind of ascent” awaits Bitcoin in Q4

Gert van Lagen, an independent technical analyst, appears confident that the current price action for BTC will have an explosive outcome. In an Aug. 27 X post, van Lagen highlights the formation of a parabolic curve, where BTC has continued to rise in a step-like formation.

The chart also illustrates the formation of a rare Cup-and-Handle (CnH) pattern on the weekly chart. The pattern has taken shape over almost three years, dating back to October 2021.

A successful breakout from a CnH pattern can trigger a parabolic rise since the pattern confirms a trend bottom and then a higher sideways consolidation during its development.

The success rate of a CnH pattern is also very high at 95%, according to Tom Bulkowski, a well-known trader and creator of Thepatternsite.com. Bitcoin 3-Year Chart Pattern Nears Breakout Point as Analyst Expects 312% ROI_1

Bitcoin 3-Year Chart Pattern Nears Breakout Point as Analyst Expects 312% ROI_1

Bitcoin Cup and Handle pattern approaching parabolic breakout. Source: X.com

In the parabolic curve, Base 1 was formed at the market bottom in November 2022. A recovery from the market bottom at $15,460 to $25,290 confirmed Base 2. Bitcoin’s sideways consolidation between $30,000 and $25,000 during April 2023 and September 2023 led to Base 3.

Moving forward, Bitcoin witnessed its first parabolic rise of 198%, reaching a new all-time high of $73,737 in March 2024.

Over the past few weeks, the BTC/USD chart has printed the formation of Base 4, which is the final phase of the parabolic curve. Base 4 is also the “handle” part of the CnH pattern, which is approaching a breakout simultaneously.

Once Bitcoin breaches above Base 4, the analyst expects “the steepest kind of ascent BTC has ever witnessed,” or a blow-off-top rally.

By the end of 2024, the price target is above $260,000, which is a 312% gain from BTC’s current prices.

Over $7B shorts will be liquidated at $70,500

Bitcoin price, crossing above its previous all-time high range at over $70,000, will not be without a few consequences for futures traders. Data from Coinglass suggests a large liquidation event will occur once BTC crosses $70,493. Bitcoin 3-Year Chart Pattern Nears Breakout Point as Analyst Expects 312% ROI_2

Bitcoin 3-Year Chart Pattern Nears Breakout Point as Analyst Expects 312% ROI_2

Bitcoin liquidation heatmap. Source: Coinglass

As observed, short liquidations amount to $7.18 billion at that price as of Aug. 27. Similarly, at $72,581, another $6.54 billion in short positions will be liquidated, which means the futures market is still strongly positioned between both bullish and bearish traders.

However, the Long/Short accounts turned strongly bullish over the past 24 hours despite BTC’s price slump. Bitcoin 3-Year Chart Pattern Nears Breakout Point as Analyst Expects 312% ROI_3

Bitcoin 3-Year Chart Pattern Nears Breakout Point as Analyst Expects 312% ROI_3

Bitcoin long/short accounts on Binance. Source: Coinglass

The data indicates that 57.19% of the accounts are currently long. Yet, the taker buy/sell volume between long and short traders was closely matched, as the Longs/Short ratio remained at 1.01.

Bitcoin to enter “the Banana Zone”

Cointelegraph reported a similar prediction for Bitcoin by another analyst, who predicts BTC to reach as high as $150,000 by the end of 2024.

Jame Coutts, Real Vision analyst, touts a familiar tone where he expected BTC price action to enter “batshit season” or the Banana zone.

A banana zone is defined as a parabolic rally where price and volume witness a significant escalation, which triggers collective market interest and, hence, a further continuation of exponential rise.

Additionally, Smithson With, a Bitcoin researcher, also shared a study that correctly called Bitcoin’s peak from previous bull cycles. With's price targets varied over the course of 2025, but the minimum expected price is $164,173 by Jan. 1, 2025.

Overall, these predictions follow a similar pattern where BTC is expected to move rapidly once its previous all-time high is breached.

Source: Cointelegraph

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JPMorgan

Economic

The Importance of Housing

In the second quarter of 2024, U.S. homebuilding accounted for just 4% of GDP. However, over the past 25 years, the sector has been three times as volatile as GDP overall, making it an important swing factor in determining the overall direction of the economy.

Following a frenzy of homebuilding in early years of this century, housing activity slumped in the Great Financial Crisis, with starts plunging from a peak of over 2 million units in 2005 to less than 600,000 in 2009. Thereafter, activity recovered very slowly but steadily to just under 1.3 million units in 2019.

The housing industry saw less interruption than most other sectors from the pandemic and, in a post-pandemic economic surge, housing starts climbed to just over 1.6 million in 2021. However, high prices and rising interest rates then took a toll with starts falling to 1.553 million units in 2022, 1.420 million units in 2023 and an annual rate of 1.378 million units in the first six months of this year.But where homebuilding goes from there depends principally on three factors: demographics, inventories and affordability.

Demographics: A Stabilization in U.S. Population Growth

Starting with demographics, the U.S. Census Bureau does a woefully bad job in what is presumably its primary task – that is estimating and publishing accurate and timely information on births, deaths, net immigration and the overall growth of the population. Nevertheless, it is possible to piece together a reasonably coherent picture of U.S. demographic trends from a hodge-podge of other sources.

A good starting point in assessing current U.S. demographic trends is to look at the components of population growth for the year ended on June 30th, 2023 which Census reported, (with its usual urgency), in the middle of last December. In that year, according to the official numbers, there were 3.653 million births, 3.149 million deaths, net immigration of 1.139 million and overall population growth of 1.643 million, or 0.49%, bringing the total population to just under 335 million people.

The last official monthly data from Census on births and deaths is from September 2023. However, extrapolating from more recent state data suggests that births likely fell further over the past year to roughly 3.6 million, their lowest level, outside of the pandemic, since 1979. Deaths have, thankfully, fallen from their pandemic highs, and should have declined to 3.1 million in the year ended on June 30th, 2024. Still, this would imply just a 500,000 gap between births and deaths which is normally referred to as the “natural” increase in the population.

On top of this natural increase, however, the Census Bureau could report net immigration over the past year of 1.2 million. Total U.S. immigrant visas issued in foreign countries fell from 609,000 in the year ended in June 2023 to 601,000 in the year ended in June 2024. However, looking at border crossings, while there has been some decline in recent months, the numbers are still far above pre-pandemic levels, and total encounters with border patrol agents were up 8% in the year ended in June 2024 compared to a year earlier, at a level of 3.3 million.

It is by no means clear how to translate border crossings into net migration numbers. However, it does seems likely that Census underestimated the growth in net migration in the year ended in June 2023 and may take some steps to remedy this in their estimate for the latest year.

However, even if, under what we think is a conservative estimate, net migration was 1.2 million people and total population growth was therefore 1.7 million over the past year, it would imply a significant demand for new housing units. Moreover, even if migration were to slow dramatically from here, housing demand would likely grow further, as more recent immigrants found employment and became more integrated into the U.S. economy.

In short, while the natural growth rate of the U.S. population is likely to continue to slow in the years ahead, the recent surge in immigration could boost housing demand for years to come.

Supply: A Need to Build

Second, to the great discomfort of home-buyers but to the advantage of home-builders and sellers, supply remains very tight.

In June, there were just 1.32 million existing homes for sale – higher than a year ago, but still far below the 1.92 million units that were on the market 5 years ago. A similar picture can be seen in vacancy rates. In the second quarter of this year, the vacancy rate for owned homes was just 0.9% while the vacancy rate for rental properties was just 6.6%, both significantly below their levels of five years ago and far below their average levels over the past 50 years.

The reality is that many younger home-owners are essentially trapped in the home that they bought a few years ago as they cannot afford to move since it would involve replacing their existing mortgage with something carrying a much higher rate. This is less of a problem for older home-owners who have paid off their mortgages. However, this lack of supply is providing builders with an incentive to build new properties – particularly in areas where population growth is strongest.

Affordability: A Little Relief on Mortgage Rates

The third key issue for the housing outlook is affordability and here, until very recently, the picture was grim. In June 2019, the monthly mortgage payment on the median-priced existing single-family home was roughly $1,064 – with relatively subdued home prices and mortgage rates averaging 3.80%. Five years later, in June of this year, this payment had more than doubled to $2,253, reflecting a 56% increase in median existing home prices and an almost doubling of mortgage rates to an average of 6.92%. Housing affordability effectively got hit with a one-two punch of soaring prices due to post-pandemic scarcity and then aggressive monetary tightening, between March 2022 and July 2023.

While per capita personal income has risen by 28% over the same 5-year period, clearly home-ownership has been put out of reach for millions of potential buyers.That being said, there are some positive signs on affordability in recent economic trends.

First, this drift down in rates should continue in the year ahead as hopes of Fed easing finally become reality.Second, strong stock market gains over the past two years have increased the ability of more affluent households to buy new homes in all-cash deals or with larger down-payments, and,Third, while mortgage payments have increased dramatically, so have rents. According to Zillow, the average listed rent on all single and multi-family homes in June was $2,054 – up 35% from five years earlier. This, of course, gives renters a powerful incentive to buy a home - if they can just find a way to do so.

The Housing Outlook and Implications

As mortgage rates drift down further and potential homebuyers accumulate the resources needed to buy a home, home-building activity should begin to revive. While we expect home-building to still drag on third-quarter economic growth, as has been the case for most of the past three years, by the fourth quarter, activity should begin to rebound and should provide a significant boost to economic activity in 2025, an important positive in a economy still delicately balanced between growth and stagnation.

For investors, in broad terms, it will be important to keep track of housing as a key determinant of whether a soft-landing economy can continue to support both U.S. bonds and stocks. In narrower terms, a potential improvement in housing fundamentals should support both the logic of personal home-ownership and investments in housing for rent as part of a real estate portfolio.

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Thomas

Political

Economic

Democratic presidential nominee Kamala Harris is promising to build more housing as the centerpiece of an effort to tackle rising costs that have stressed U.S. households and left home ownership beyond the reach of many Americans.

While Harris has deliberately steered clear of some policy specifics in her month-old presidential bid, she has laid out detailed plans to spur new construction and reduce costs for renters and homebuyers, largely through tax incentives.

"We will end America's housing shortage," she said as she accepted the Democratic presidential nomination last week.

Republican presidential candidate Donald Trump's campaign has also promised to reduce costs through tax breaks and reduced regulations. But on the campaign trail, he has defended local housing restrictions that prevent many types of affordable housing from being built.

Voters rate housing costs as their second-most important economic worry, after fears of rising prices and stagnating income, a Reuters/Ipsos opinion poll found in May.

Housing construction collapsed during the 2007-2009 financial crisis and has been slow to recover in the years since, leaving the United States short 2.9 million units, according to Moody's Analytics.

Pandemic-driven shortages of construction materials pushed up the price of new housing, while rising interest rates made mortgages more expensive.

U.S. home prices have risen 50% in the last five years and rents have risen 35%, according to real estate firm Zillow.

Harris' housing plan could help her win over voters in an election where economic concerns are paramount, said Alyssa Cass, a Democratic strategist who says the issue is a top concern in focus groups.

"Anything that would reduce the cost of housing is music to voters' ears," she said.

At an Aug. 16 campaign stop in North Carolina, Harris called for building 3 million more housing units in four years, on top of the 1 million or so built annually by the private sector, through a new tax credit for developers who build homes aimed at first-time homebuyers and a $25,000 tax credit for those buyers.

She also proposed a $40 billion fund to encourage local governments to build more affordable housing, streamlining regulations and expanding rental aid, among other steps.

The Committee for a Responsible Federal Budget, a nonpartisan watchdog group, estimates those policies would cost at least $200 billion over 10 years.

If elected president, Harris might have trouble enacting those policies into law as similar proposals from President Joe Biden have failed to clear Congress.

Trump's position is less clear. The Republican Party's platform calls for boosting home ownership through tax breaks and eliminating regulations, though it does not outline specifics.

However, Trump also has spoken against proposals to loosen local zoning restrictions that prevent apartments, duplexes and other forms of affordable housing from being built in neighborhoods reserved for single family houses.

“I keep hearing about the suburban woman doesn't like Trump," he said at a campaign event in Howell, Michigan last week. "I keep the suburbs safe. I stopped low-income towers from rising right alongside of their house, and I'm keeping the illegal aliens away from the suburbs."

Trump's running mate, U.S. Senator JD Vance, has blamed immigrants for the housing shortage.

Jenny Schuetz, a housing expert at the nonpartisan Brookings Institution, said that comment amounted to a "not very subtle dog whistle" that recalled the racially charged housing fights of the 1970s, when white residents resisted efforts to integrate suburban areas.

"Trying to frame housing affordability as a social issue, rather than an economic one, isn't helpful to actually addressing the problem," she said.

During Trump's 2017-2021 presidency, his housing secretary Ben Carson proposed easing zoning rules but did not take action. More recently, he called for opposing any efforts to weaken single-family zoning in Project 2025, a conservative policy plan that has been disavowed by the Trump campaign.

Harris has not said whether she would push local governments to loosen zoning regulations, but she has been involved in a broader Biden administration effort to encourage development.

In June, she announced $85 million in grants to 21 local governments to remove "barriers to affordable housing," including reforming land-use policies in some areas. The Biden administration plans to distribute another $100 million later this year.

Source: The edge markets

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Commodity

Gold price dips close to record high

The price of spot gold has recovered from Thursday's sharp drop to $2,471.00 per troy ounce on a softening US dollar but so far hasn’t managed to overcome its current record high at $2,531.00.

The short-term bullish outlook will persist as long as prices hold above the recent $2,471.00 low and $2,469.00 July peak. Above it lies the August uptrend line at $2,497.00 which may also hold.

Brent crude oil

Front month Brent crude oil futures are on track for their fourth straight day of gains from last week’s 75.24 low amid major airborne attacks by Russia on Ukrainian energy infrastructure. This low was made just above the early August low at 74.97.

The break through the July-to-August downtrend line at 79.68 is positive and points to the 55- and 200-day simple moving averages (SMA) at 81.95-to-82.02 now being in focus, together with the 81.97 mid-August high.Potential support below the breached downtrend line at 79.68 can be found around the late July low at 77.95.

US natural gas futures drop to two-week low

Last week US natural gas front-month futures stalled once again around the 200-day SMA at 2.304, after hitting a minor peak at 2.379 on Tuesday, before resuming their descent. They now trade in two-week lows and are about to hit the mid-July low at 2.045 ahead of the late July low at 2.006 and the early August trough at 1.918.

Minor resistance sits at the 19 August low at 2.197. Gold Price Dips Close to Record High, Brent Crude Oil's Continued Gains, and US Natural Gas Futures Drop to Two-week Low_3

Gold Price Dips Close to Record High, Brent Crude Oil's Continued Gains, and US Natural Gas Futures Drop to Two-week Low_3

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Warren Takunda

Economic

Germany's economy took a step back in the second quarter of 2024, with the gross domestic product contracting by 0.1%, according to final figures released Tuesday by the Federal Statistical Office.

This downturn, following a modest 0.2% growth in the first quarter, signals growing concerns of an impending recession if economic conditions do not improve in the current quarter.

"After the slight increase in the previous quarter, the German economy slowed down again in spring," stated Ruth Brand, President of the Federal Statistical Office, highlighting the fragility of Germany's economic recovery.

Compared to a year earlier, the German economy showed no growth, having last recorded year-on-year expansion in the first quarter of 2023.

Conr spending and investments weaken

The economic decline was largely driven by a reduction in household consumption and investment. Household final consumption expenditure fell by 0.2%, reversing the gains seen earlier in the year. On the other hand, government final consumption rose by 1.0% from the previous quarter.

Investments showed significant weakness underscoring the hesitancy of businesses to commit to new projects amid growing economic uncertainty.

Gross fixed capital formation, a measure of investment in physical assets, saw a steep decline. Investment in machinery and equipment dropped by an annualized 4.1%, while construction investment fell by 2.0% on the quarter.

Foreign trade, typically a strong point for the German economy, also failed to provide any positive momentum. Exports of goods and services declined by 0.2% compared to the first quarter of 2024, reflecting weaker global demand and supply chain disruptions.

Sector-wise, the construction activity faced significant challenges, contracting by 3.2%. The downturn in building construction and completion work highlights the broader slowdown in one of Germany's most critical industries.

Despite the economic slowdown, employment trends remained positive. The number of employed persons rose by 0.4% compared to the second quarter of 2023. Additionally, average gross wages and salaries per employee increased by 5.1% year-over-year, providing some relief to workers amid rising inflation and economic uncertainty.

Germany lags behind peers

Germany's economic performance in the second quarter of 2024 was notably weaker than that of other major economies.

The European Union as a whole grew by 0.3% during the same period, with Spain leading the way with a 0.8% real growth. France and Italy also posted modest gains of 0.3% and 0.2%, respectively.

Meanwhile, across the Atlantic, the United States recorded a 2.8% economic growth, further highlighting Germany's sharp underperformance.

Consumer confidence plummets

Adding to the gloomy economic outlook, a separate report released on Tuesday by the GfK revealed a sharp decline in consumer confidence.

The forward-looking Consumer Climate index fell by 3.4 points to -22.0 in September, as income and economic expectations weakened significantly, and the willingness to spend also dropped.

"Apparently, the euphoria of German consumers triggered by the European Football Championship was only a brief flare-up and faded after the end of the tournament," noted Rolf Buerkl, a consumer expert at the Nuremberg Institute for Market Decisions (NIM).

He added that "negative news about job security is making consumers more pessimistic, and a fast recovery in consumer sentiment seems unlikely".

The deteriorating consumer sentiment reflects broader concerns about Germany's economic future. The Federal Employment Agency recently reported a slight increase in unemployment rates, with the number of people registered as unemployed currently around 200,000 higher than a year ago.

The combination of a weakening economy, planned job cuts in key industries, rising insolvencies, and the increasing risk of a recession has created an atmosphere of uncertainty and economic pessimism that is likely to persist in the coming months.

Kyle Chapman, FX analyst at Ballinger Group said: "The German economy is finding it difficult to gain enough traction to pull itself out of stagnation, and the confidence survey figures have begun to turn sharply in the wrong direction. We were teased by some optimistic data in Q1, but ultimately, weak foreign demand, budget rigidity, and structural workforce issues are having a big drag effect. The 'sick man of Europe' label is likely to stick for a while longer."

Source: EuroNews

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Kevin Du

Economic

(Aug 27): Global money has flooded into Indonesia’s financial markets this month, signalling the country’s assets have quickly become a preferred investment destination as the US Federal Reserve’s easing cycle nears.

Overseas investors have bought US$933.8 million (RM4 billion) of the nation’s stocks in August, on course for the biggest monthly purchases since April 2022, while net inflows of US$2.5 billion into bonds is the most in more than a year, according to data compiled by Bloomberg. The influx of money saw the rupiah briefly erase this year’s losses against the dollar, with a gain this month surpassed in Asia only by Malaysia’s ringgit.

The swing into Indonesia’s assets comes as foreign funds reduce holdings in a number of other regional equity markets including India and China in favour of Southeast Asia, which is seen as being relatively undervalued. The prospect of the nation’s central bank following the Fed to lower borrowing costs to potentially boost economic growth has boosted the appeal of the nation’s assets.

While net buying of the nation’s bonds is set to be the highest since January 2023, the rotation into stocks has driven the benchmark Jakarta Stock Index to record highs every few days through August. With Indonesia capturing the lion’s share of equity flows this month, foreigners have also been net purchasers of Malaysian and Philippine shares.

Indonesian stocks have started commanding greater heft as Asian funds ended their underweight stance on the Southeast Asian market, HSBC Holdings Plc strategists including Prerna Garg wrote in a note dated August 26.

Meanwhile, Nomura Holdings Inc strategists including Chetan Seth upgraded the country’s equities to overweight from neutral this week, saying they are “possibly the best way” to bet on emerging-market stocks as the Fed starts to cut rates.

Source: The edge markets

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Pepperstone

Economic

Stocks

Where We Stand –

The tech sector bore the brunt of the aforementioned softness on Wall Street, with the Nasdaq ending the day around 1% lower, likely a result of positioning and de-risking ahead of NVDA’s earnings after market close tomorrow, where options price a move of as much as +/- 10% in the 24 hours following the report. Naturally, NVDA’s guidance, as well as the figures themselves, will be a key driver of not just the tech sector, but broader market sentiment, and stand as the next key event risk for participants to navigate.

Despite the tech softness, signs of a rotation did emerge under the hood of the US equity market, with the Dow (despite it’s archaic nature) ending at a record high, and the Russell adding around 0.2%. A short-term window of small cap outperformance does appear to have opened here, after Powell’s more dovish-than-expected remarks at Jackson Hole on Friday, as the Fed Chair strengthened the ‘Fed put’, making policy shifts almost solely contingent on developments in the labour market. The August jobs report, due 6th September, is the next major macro catalyst on the horizon, with further softness here likely to cement the case for a 50bp cut at the September FOMC meeting, though my base case remains for a more modest 25bp move at the time of writing.

Market Thoughts – Tuesday 27 August 2024_1

Outside of equities, crude remains underpinned by heightened geopolitical risk in the Middle East though, as we have seen many times since last October, the impact of said tensions tends to be relatively short-lived, with the bulls likely requiring a sustained pick-up in demand in order to build a sustainable rally. The spectre of OPEC+ increasing output in Q4, as production cuts come to an end, also continues to hang over the market.

The FX space, meanwhile, is subdued, with the dollar holding close to yesterday’s highs, albeit with the DXY having been unable to reclaim the 101 handle just yet. Some profit taking continues in the EUR, pulling back from 1.12, and in cable, dipping beneath the 1.32 handle, with both likely having further room to retrace as last week’s aggressive USD selling seems somewhat overdone. The AUD & NZD trade firm, sitting as the best G10 performers this morning, despite the somewhat soggy APAC risk tone, and ahead of Aussie CPI figures due for release in the early hours (London time) of Wednesday morning. Risks to the CPI print are likely to the downside of the 3.4% YoY consensus, given the early-quarter nature of the data leading to a heavily goods-biased composition of the inflation basket used to calculate the figure.

Treasuries also continue to retrace, led by the front-end, with 2s having now pared around half of last Friday’s advance, as the market continues to modestly hawkishly reprice Fed expectations. The USD OIS curve now discounts around 96bp of cuts by year-end, compared to over 100bp on Friday.

There appears further room for this retracement to continue, with such an aggressive pace of easing likely not warranted barring an exogenous economic shock. Hence, risks remain tilted to the downside at the front end of the curve, with markets also having to navigate sizeable 2y, 5y, and 7y supply this week. Further selling pressure in Treasuries should help the greenback to continue its modest rebound from YTD lows seen Friday, while also likely posing a modest headwind to gold, which sits around 1% shy of fresh record highs, with spot having seem some slight downside through Asia trade.

Look Ahead –

Another day lacking in major macro releases looms, with the August US consumer confidence and Richmond Fed manufacturing figures unlikely to inspire, potentially leading participants to sit on their hands ahead of the aforementioned NVDA earnings risk. Some further position squaring through the session, into earnings, seems likely.

Remarks from the ECB’s Nagel and Knot should pass without event, as the Governing Council look nailed on for another rate cut at the September meeting, and with E/Z flash CPI figures due Friday morning. 2y US supply due later is also on the radar, after the last auction for the tenor saw a 2.3bp stop through, the largest such stop through the WI yield in over five years.

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