The price of Bitcoin is increasing as the US Federal Reserve signals that it plans to make three rate cuts in 2024. This announcement has led to a bullish reaction in both traditional asset markets and the cryptocurrency market. The Fed's decision to keep interest rates on hold, combined with their forecasts of slowing inflation, easing growth, and a softening labor market, has created expectations of future rate cuts. This has resulted in easier US financial conditions and increased liquidity, leading to a drop in US yields, the US dollar, and a pump in liquidity-sensitive assets such as stocks and cryptocurrencies. At its current price level, Bitcoin is approaching a 50% retracement of its recent pullback from yearly highs. Analysts attribute the pullback to profit-taking and the wipe-out of overly greedy bulls using leverage in the futures market. However, conditions in the futures market indicate less excessive bullishness, which sets the stage for a more sustainable short-term price rise. Near-term price predictions for Bitcoin remain bullish due to expectations of a Fed easing cycle, institutional adoption, the potential approval of spot Bitcoin ETFs in the US, and other positive factors such as the Bitcoin issuance rate halving in 2024 and the possibility of a more pro-crypto President in 2024. Additionally, recent bullish technical developments are likely to encourage chart-focused traders to continue buying Bitcoin. The next major upside target for Bitcoin is the 2022 highs in the $48,200s. While it remains to be seen if the current "Santa Rally" will continue and extend into the year's end, the price risks for Bitcoin seem to be tilted to the upside.
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