Despite Bitcoin’s recent rise, CoinShares predicts it may fluctuate below $80,000 in the short term. According to the company, a sustained breakout above this level would require a clear indication from the Fed that it will not pursue further monetary tightening.
According to an assessment published by CoinShares, the recent rise in Bitcoin is driven more by macroeconomic conditions than by developments specific to the cryptocurrency market. Moderate inflation in the US and data indicating a weakening job market have reduced expectations that the Fed will take a more restrictive stance on monetary policy.
The company noted that despite hawkish views emerging in the latest Federal Open Market Committee (FOMC) minutes, data released after the meeting increasingly weakened the likelihood of further monetary tightening. It was also stated that Bitcoin, which is sensitive to liquidity expectations and changes in real interest rates, reacted strongly to these developments.
According to CoinShares, the decline in short-term US Treasury yields indicates that investors do not expect further interest rate hikes from the Fed. Conversely, the high yields on 30-year Treasury bonds suggest that concerns persist regarding the US fiscal outlook and the sustainability of public debt.
Analysts noted that the combination of easing monetary policy expectations and concerns in the long-term bond market has historically created a favorable environment for Bitcoin. They also pointed out that a potential intervention by the US Treasury in the long-term bond market could be stronger than markets anticipate.
CoinShares noted that the rise in Bitcoin was fueled by large-scale short liquidations, and that on-chain data showed large investors beginning to accumulate again. However, the company expects the $80,000 level to remain a critical upper resistance for Bitcoin unless the Fed explicitly confirms a change in policy risks.
*This is not investment advice.