Bitcoin's ability to stabilize rather than keep falling after the Clarity Act failed its Senate vote can be read as a quiet vote of confidence.
The bill's collapse removed a hoped-for catalyst, yet the market did not treat it as a thesis-breaking event. After a contained drop, the price held and is even ticking higher. The absence of a cascade lower is evidence that Bitcoin's story is no longer hostage to a single Washington outcome.
With Bitcoin signaling a potential bullish turn, it is worth examining the technical outlook for both the cryptocurrency and Coinbase.
The long-term monthly chart of Bitcoin reinforces my optimistic outlook. While it has lagged relative to the broader market since last July, time will tell if this nascent bounce develops into a sustained trend. Adding to the thesis is the potential for a bullish MACD crossover, a signal that last triggered in 2023 near $25,000 before initiating a major leg higher.
Bitcoin experienced a strong hiccup with a failed breakout above a bull flag. In March 2020, a bullish hammer marked the $4,200 low of the pattern before propelling the price toward $65,000 just 13 months later. When that peak failed to resolve upward, a rapid unwinding followed, demonstrating how false moves trigger fast opposing moves, with selling pressure ultimately finding a floor near $15,000 in November 2022.
Since that 2022 bottom, price action has remained remarkably structured around the 50-month simple moving average. Completions of bullish morning star patterns near this key moving average ignited major rallies: January 2023 saw a 40% gain, and October 2023 added 29%. A third morning star completed in August right at the 50-month SMA moving 26% higher, marking an optimal retest following the initial breakout above the $74,000 cup-with-handle pivot in November 2024.
In the prior two instances, the price climbed powerfully afterward.
Driven by this repeated defense of the moving average, Bitcoin remains well-positioned to target the $125,000 area by early 2027, offering a potential 63% upside from current levels. Maintain a bullish bias as long as the price holds above $70,000.
Bitcoin was trading around $76500 Thursday.
As a primary exchange platform for digital assets, Coinbase stands to directly benefit from a rising Bitcoin cycle. However, the stock has lagged severely, trading 47% below its 52-week high, and its ratio chart against the iShares Expanded Tech-Software Sector ETF reflects a steady one-year downtrend. Despite this drag, the steep discount presents a compelling risk/reward opportunity.
Technical momentum shifted on Aug. 20-21, when the stock broke out above a bearish descending triangle via a sharp 16% two-day surge. That breakout neutralized several bearish patterns embedded in the triangle, including a Jan. 15 evening star (preceded by a doji the day prior) and a May 12 harami.
Price action is now holding above its 50-day SMA, which turned upward in mid-August, though it continues to face overhead resistance at the 200-day simple moving average. A position can be established at current levels, targeting a rally toward $310 by mid-2027, which represents an 82% gain from current prices. Remain bullish above $160.
Coinbase was trading around $169 Thursday.
Doug Busch is the senior technical analyst at Barron's Investor Circle. His technical view is added to stock picks, including those published exclusively for Investor Circle readers. A glossary of technical terms is updated regularly with new entries.