Bitcoin's Potential to Reach Another Record High Dependent on These Three Factors
The US Federal Reserve has made a move that could potentially impact the cryptocurrency market. On Wednesday, the central bank cut the benchmark interest rate by 25 basis points, bringing it down to a range of 4.00-4.25%.
This decision was supported by the majority of policymakers, indicating a unified approach towards stimulating the economy.
With the interest rate cut, demand for non-yielding assets like Bitcoin is expected to increase. This could be a significant factor driving the recent surge in Bitcoin's price over the past two weeks.
The surge is attributed to a combination of factors. These include increased demand amid broader cryptocurrency market gains, expectations of a relaxed US Federal Reserve monetary policy despite cautious Fed rhetoric, and positive market sentiment triggered by macroeconomic data showing a cooling economy.
These elements together suggest that Bitcoin is positioned to potentially surpass its previous all-time high around 124,500 USD and reach new peaks. Some analysts are even forecasting prices between 180,000 and 251,000 USD by the end of 2025.
On-chain analysts predict that the next two weeks will be a crucial period for price movements in Bitcoin. If the volume of open interest in the Bitcoin futures market continues to increase, as seen with Binance recording a positive change of $166 million in long positions and OKX following with a positive change of $131 million, the opportunity to set a new all-time high will be greater.
Adler Jr., an analyst, predicts a 70% chance of a gradual Bitcoin price increase or consolidation over the next two weeks. He believes that if the scenario of increasing open interest materializes, a price breakout above the all-time high becomes increasingly likely.
Moreover, Adler Jr. notes that sentiment in the derivatives market has now clearly shifted towards risk-taking. He emphasizes the importance of the price not dropping during this period and the futures price remaining above the spot price. If the scenario unfolds as predicted, a new price record for Bitcoin could be on the horizon.
However, it's important to note that the Fed's interest rate projection chart indicates an additional 50 basis points of cuts before the end of the year. This could further influence the Bitcoin market and other non-yielding assets.
In conclusion, the US Federal Reserve's interest rate cut could be a catalyst for Bitcoin's potential price increase, with the next two weeks being a crucial period to watch. As always, it's essential to approach investment decisions with caution and a comprehensive understanding of the market.
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