BlackRock Bitcoin ETF Poised for Boom After Reaction to U.S. Downgrade
The iShares Bitcoin Trust ETF faces a potential breakout as dip buyers react to a surprising U.S. credit rating downgrade.
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Dip buyers showed up at the opening bell on Monday morning following a gap-down on the Moody's downgrade of U.S. debt. Bonds are under significant pressure as interest rates rise, but equity buyers who missed out on the recent rally are using the pullback to put some cash to work.
There is still significant red on the screens, with breadth running more than three-to-one negative, but the low opening is now the key support. If that holds and there is a strong close, it will be technically positive. There is still a big gap on the charts, quite a bit lower than was created last Monday on the tariff delay negotiated with China, which the bears will be watching, but there is another gap even lower that has never been filled.
I'm looking for some buys, but will move slowly and incrementally. I don't think the recent trend is dead yet, and some backing and filling is technically healthy.
One chart that caught my eye over the weekend is the iShares Bitcoin Trust ETF IBIT. IBIT is an exchange-traded fund (ETF) that tracks Bitcoin's movement, operated by mega investment firm BlackRock.
While there is always much talk about the value of Bitcoin and how high it can go, it has no intrinsic value, so it's all speculation. Bitcoin doesn't produce income and has no cash flow. Standard valuation metrics that are used for stocks and bonds are not relevant. The only way to value Bitcoin is to evaluate supply and demand, and the best way to measure supply and demand is to look at the charts. The charts only care about price action.
Although chart reading is more an art than a science, and technicians often disagree about charts, I believe the IBIT technical setup is very bullish. Following a deep correction in March and April, IBIT has rebounded sharply and is now testing the highs that it hit in December 2025 and January 2026. It is possible that it could fail as it hits this overhead resistance, but it has been basing just under the highs over the past week and is forming a handle on the large cup that has developed since January.
What needs to happen next is to move over the highs around $60, which is the pivot point. Breakout buyers are likely to jump in and generate momentum if there is a clean move on strong volume. Most technicians want to see the actual breakout, but I'm being more anticipatory here. The U.S. debt downgrade is theoretically positive for cryptocurrencies, but after Bitcoin flew higher over the weekend, it is trading lower on Monday morning. I suspect that there will be a supply of buyers providing support.
After some sales last week, I have plenty of capital for new buys, but I'm going to stay very selective with partial buys.
At the time of publication, DePorre was long IBIT.
