Wolfe Research, a market analysis platform, has recently suggested that the decline in the price of Bitcoin is setting the stage for a new rally. The firm considers the dip a good buying opportunity for Bitcoin.
November was a tumultuous month for Bitcoin, and significant buying pressure emerged on the largest cryptocurrency following positive developments. This pressure pushed the price of Bitcoin up to $38,400 on November 24.
Despite efforts to stay above the psychologically important $40,000 level, Bitcoin faced downward pressure. According to Wolfe Research, this price drop presented a significant buying opportunity for investors willing to take risks, offering a high risk-reward ratio.
Wolfe Research predicts that Bitcoin’s next target level is $40,000, a forecast that is not overly ambitious considering the level last seen on May 12, 2022. A return to this level is expected with regulatory developments and increased adoption.
The market is eagerly awaiting two significant factors that could drive up the price of Bitcoin. The first is the approval of a spot exchange-traded fund (ETF) by the U.S. Securities and Exchange Commission (SEC). According to Bloomberg analysts, with applications from major companies in the race (such as BlackRock, Fidelity Investments, VanEck, Bitwise), there is a 90% likelihood that a Bitcoin ETF will be approved by February 2024. The second crucial factor is the block reward halving expected in April 2024. The block reward halving will reduce the reward miners receive per block from 6.25 BTC to 3.125 BTC, effectively decreasing the supply rate of Bitcoin and paving the way for a price increase.