Bitcoin could stay rangebound for several weeks more but Solana is poised for a breakout, says Wolfe Research

Published Thu, Feb 1 20241:06 PM ESTUpdated Thu, Feb 1 20241:25 PM EST

Bitcoin investors have high hopes for 2024 given the cryptocurrency's almost too-good-to-be-true setup , but they may have to wait a few weeks more for its next big ascent, according to Wolfe Research. On Wednesday, bitcoin finished the month of January right where it started, just above the flat line at the $42,000 level, despite the long-awaited launch of spot bitcoin exchange-traded funds in the U.S. That's largely due to an extended sell-the-news phenomenon that pushed bitcoin below $39,000 at one point. The price has recovered but has yet to reclaim its post-ETF approval highs. BTC.CM= 1M mountain Bitcoin ended the month of January flat and is poised for more weakness, says Wolfe Research. "Although it's rallied back about 15% off that Jan. 23 low, we see continued consolidation in the low $40,000 range over the next few weeks," Wolfe's chart analyst Rob Ginsberg said in a note Wednesday. "A breakout does not look likely in the near term. … Bitcoin's longer-term overbought condition has still yet to really come in. This leads us to believe we see further declines over the next month or two before its next run." Meanwhile, Solana and other altcoins may be poised for breakouts. "With a bull flag now forming … and [the moving average convergence/divergence] turning back positive, we feel a breakout through $100 to new highs is near," Ginsberg said of Solana. "Several of the altcoins we look at are setting up similarly. If this risk on attitude to start the year is to continue, crypto — and particularly altcoins — stand to reap those benefits." Solana rallied more than 550% between September and January before pulling back in recent weeks. SOL.CM= YTD mountain Solana pulled back in January after being the top crypto performer in 2023. "We're used to seeing bitcoin outperform other assets, so this is quite telling," Ginsberg said. "Solana and other altcoins have come on strong in recent months and [will] likely continue that outperformance near term." Altcoins have been more in focus since about the time the U.S. Securities and Exchange Commission greenlit trading of spot bitcoin ETFs. The day before the approval, on Jan. 9, bitcoin dominance , which shows how bitcoin is performing relative to other crypto assets, dropped sharply. With investors looking forward to a bull run in bitcoin, they're expecting more trading action in smaller and cheaper altcoins, which benefit from rises in the bitcoin price and can give investors faster and bigger returns. Ginsberg said the tokens tied to Cardano and Avalanche are also set to rise in the near term, and Chainlink could be poised for a breakout. — CNBC's Michael Bloom contributed reporting.