Bitcoin (BTC) Nears Inflection Point: Is a Major Rally Looming?

Good news for Bitcoin is that the U.S. government is about to open for business again and locked-up funds will be spent. Inflation figures should be released at the end of the week. If they are good, and the U.S. stock market continues to rise, Bitcoin could embark on its own major rally.

Bitcoin (BTC) market sentiment is still one of extreme fear. While it needs to be acknowledged that the $BTC price has moved rather close to the cliff edge, following several weeks of bearish price action, the stage could be setting for a huge rally back to the upside.

A reopening U.S. government is likely to have a positive impact on Bitcoin. The Treasury General Account (TGA) can normalise drawdowns and bond auctions can resume, potentially releasing billions of dollars in fresh capital

A note of caution does need to be raised however. The CPI and PPI figures are due to be released later this week (government opening allowing) and these could ignite volatility to the downside as well as the upside.

$BTC confirms trend break

Source: TradingView

In the short-term time frame chart it can be noted that the 4-hour Stochastic RSI indicators came down to the bottom and have just crossed up. This has been reflected in the price action, where $BTC has come down to retest and confirm the trend breakout.

A couple of horizontal resistances await above, with the $107,000 resistance level in particular being a key level to break. A breakthrough here could lead to a break of the main trendline leading down from the all-time high - which could be a pivotal moment.

Retest of major trendline still to come?

Source: TradingView

The daily chart for $BTC shows how the price is being slowly funnelled into the narrowing space between 8-year and 15 month trendlines. Within these two strong boundaries the main issue to consider is probably the gap between the price action and the bottom trendline. This is quite small now, and a quick flash crash down of around 7% or so would achieve a retest of this major trend. Of course, this retest could happen at any time, and the longer the price travels sideways, the smaller that gap is going to become

2-week Stochastic RSI indicators are key

Source: TradingView

The 2-week chart shows two complete cycles for $BTC. An important factor to be borne in mind is that this current cycle is now longer than the two previous ones, and as things stand, it could be quite a bit longer, with this bull market potentially lasting into Q1 or even Q2 of 2026

Why do we think that this will happen? Besides the Bitcoin ETFs and corporate treasuries that are constantly buying, the Stochastic RSI indicator at the bottom of the chart is also illustrating that more upside price momentum is not far from being signalled. It could take the indicator lines another week perhaps to reach bottom, and then a cross back up can occur

If one takes the last 4 cross-ups of the Stochastic RSI in the 2-week time frame, the rallies were 100%, 194%, 120%, and 70% respectively. These rallies covered this entire bull market so far.

Taking the smallest of these rallies (70%) and taking the starting point as roughly $100,000, the price would potentially go to $170,000. A rally of 100% would take the price to $200,000.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.