- Bitcoin’s price is down.
- However, analysts say it’s too early to count out a crypto rally.
- Here’s what will drive the price.
A number of macroeconomic factors will drive Bitcoin’s price to $100,000 and beyond, analysts say.
Their comments come as the world’s biggest cryptocurrency fell below the $60,000 mark over the weekend, which may dampen traders’ faith in the crypto rally.
However, there are reasons to be bullish, crypto analyst Noelle Acheson says.
Bitcoin’s price climbed some 270% from the end of August to the end of December in 2020, after the previous halving, she wrote in her “Crypto is Macro” newsletter on Sunday.
By comparison, Bitcoin now only has to climb some 70% to reach $100,000.
It “is not an outrageous forecast,” she added, acknowledging that things are different than in 2020.
Others share the sentiment. "
The macro is evolving perfectly in line for Bitcoin to resume the trend higher, yet we continue to await the spark,” write David Brickell, head of international distribution at FRNT Financial, and former forex trader Chris Mill, in their latest “Connecting the Dots” newsletter.
So what will drive the price of Bitcoin?
The Fed
Jerome Powell budged on August 23.
After months of hemming and hawing, the chair of the Federal Reserve gave his strongest hints to date that the central bank is about to cut interest rates.
“The time has come for policy to adjust,” Powell said at the Kansas City Fed’s Jackson Hole Economic Symposium, in Wyoming.
That’s great news for assets like cryptocurrencies, which tend to behave as risk-on assets and are particularly susceptible to accommodative economic environments.
Or, as Matt Hougan, chief investment officer at Bitwise, put it in a recent newsletter: rate cuts “inject some animal spirits into the market.”
FedWatch data puts the odds of the Fed cutting rates by 0.25% at 69% in September, and a 31% chance it will cut rates by 0.5%.
Market watchers have waited on these cuts for months. Back in February, Fundstrat Global Advisors’ Thomas Lee argued that cuts will drive Bitcoin’s price to $150,000 by the end of 2024 and then to $500,000 over the next five years.
Everything is politics
The upcoming presidential election will also influence the price, analysts say
In November, the US electorate will pick between Donald Trump, and Kamala Harris. For crypto voters, it’s a choice between one candidate who has made several pro-crypto statements and one who hasn’t made her views on the matter clear.
The election seemed like a foregone conclusion before Biden bowed out. Now, however, Trump and Harris are neck-and-neck in polls, which has created more uncertainty and driven down the price, Acheson has said.
The Treasury
The election will also affect the policies of Treasury Secretary Janet Yellen, according to Arthur Hayes, co-founder of BitMEX.
In a recent blog, he wrote that he expects Yellen to stack the cards in Harris’ favour by pouring as much as $1 trillion into markets — boosting liquidity for traders.
“The next stop for Bitcoin is $100,000,” Hayes said.
Traditional players
The launch of spot Bitcoin exchange-traded funds this year have cemented Wall Street’s interest in crypto. Goldman Sachs and Morgan Stanley have revealed that they hold over $600 million between them in spot Bitcoin ETFs.
Crypto-native asset manager HashDex says those disclosures signal that institutional players, including, eventually, pension funds, will tap into the industry.
Politicos warming up
While the crypto views of Harris remain unclear, both Democrats and Republicans have warmed to crypto.
In May, members from both parties voted to overturn SAB 121, a controversial accounting guidance from the Securities and Exchange Commission, which critics say has deterred investment banks from offering crypto custody at scale.
Capitol Hill’s thawing attitude towards crypto is one of the many factors that make “the long-term setup for Bitcoin is overwhelmingly positive,” Hougan said.
“We have record ETF inflows, rapid institutional adoption, the after-effects of the Bitcoin halving, a warming political and regulatory environment, and runaway federal deficits,” he said. “It’s hard to imagine better conditions.”
Crypto market movers
- Bitcoin is up 0.7% in the past 24 hours to about $58,542.
- Ethereum is up 1.8% over the same period to about $2,517.
What we are reading
- Where Ethereum’s price is headed next after worst month in over two years — DL News
- 6 Stablecoins That Are Driving the Sector’s Two-Year High in Market Capitalization — Unchained
- WazirX Sets $12M For Crypto Recovery And Legal Battles Amid $230M Theft — Milk Road
- Airdrops Need to Be More Secure—Here’s How We Can Do It — Unchained
- Cardano’s Chang upgrade just went live — here’s what it means — DL News
Eric Johansson is DL News’ News Editor. Got a tip? Email eric@dlnews.com.
