- Traders expect Bitcoin to rally as 2024 comes to a close.
- China and the Federal Reserve drive the rally.
Bitcoin traders are gearing up for a critical crypto calendar month.
October kicks off a period that’s traditionally been bullish for cryptocurrencies. Bitcoin has rallied some 90% in the fourth quarter of the year over the past decade, according to CoinMarketCap analysts.
“Expect fireworks,” David Brickell, head of international distribution at FRNT Financial, and former forex trader Chris Mill, wrote in their “Connecting the Dots” newsletter. “We anticipate we could hit record highs for Bitcoin this coming week.”
They are not the only bullish ones. On Deribit, options that pay out if Bitcoin breaches $100,000 are the most traded for the December 27 expiry — suggesting that traders expect a new all-time high in the coming months.
China and the Federal Reserve are the biggest near term drivers behind Bitcoin’s rally.
China
Last week, Beijing unleashed a wave of initiatives to stimulate the Chinese economy, which “will unleash a tsunami of liquidity,” Brickell and Mill wrote.
The initiatives include a scheme to issue $284 billion worth of bonds and the central bank’s plan to cut the amount of cash banks need to have on hand by 0.5.
Bitcoin’s price surged 5% to $66,300 — its highest levels since July — on the back of the news. The cryptocurrency has since fallen back to around $63,000.
“This is just the start; the real bazooka will come when [President Xi Jinping] instructs banks to issue more credit,” BitMEX co-founder Arthur Hayes in a recent blog post.
Federal Reserve
Jerome Powell will speak at the National Association of Business Economics on Tuesday. Crypto watchers will look at the Federal Reserve chair’s speech and the new US employment data being published on Friday for clues that the central bank will cut interest rates again.
Lower interest rates translate to people having more money to invest in, which usually means traders have a bigger appetite for risk-on assets like cryptocurrencies.
Bitcoin has risen almost 10% since after the Fed announced a 0.5% cut in mid-September.
“They say don’t fight the Fed. Also don’t fight China. Definitely don’t fight the Fed and China together,” Brickell and Mill wrote.
CME Group’s FedWatch tool puts a 60% chance that the central bank will make another 0.5% cut on November 7. There is a 40% chance of a 0.25% cut.
Eric Johansson is DL News’ News Editor. Got a tip? Email at eric@dlnews.com.
