- Cryptocurrency markets have finally bottomed out with Bitcoin nearing $80k.
- We expect a market-wide surge to $100k per BTC; however, further gains are capped due to high Federal Reserve interest rates, which have choked market liquidity.
- Derivatives data suggest we might see a sell-off around $100k. However, a fall below $70k might not happen in the near future.
Bitcoin Finally Bottoms Out
Cryptocurrency markets have finally bottomed out, with Bitcoin decisively crossing $ 70,000 and nearing the $80,000 mark. This week, Bitcoin decisively crossed the most critical hurdle of $71,000, which now acts as a critical support level.
Market sentiment has also lifted significantly, as the Bitcoin Fear and Greed Index has jumped out of the extreme fear zone (0-25) and is now at 31 at press time.
We doubt Bitcoin will crash further below $70,000, given strong derivatives data, as shown below.
The data also signifies that although the recovery has been strong, there are fewer chances of this rally sustaining above $100,000. There is a significant number of call options standing at $100,000, and they would make it almost impossible for Bitcoin to cross that mark.
What Bitcoin Needs to Cross $100k?
Any surge above $100,000 has to be accompanied by a strong market signal, such as:
- lowering of interest rates
- end of global conflicts
- resurgence in economic growth in primary markets
The US Federal Reserve has kept interest rates at 3.67% (effective federal funds rate), which is still high by historical standards. The rates need to be lowered as the current global economic model relies on easy availability of debt to grow. Further, the high fed rate makes bonds more attractive than volatile assets (equity, crypto), which chokes liquidity flowing into the latter. Therefore, a lower interest rate is necessary for the crypto market to grow.
Global conflicts choke the supply of free flow of critical goods such as food and fuel. As a result, the choked supply causes high inflation and erodes the average crypto investor’s buying power, prompting them to withdraw money from their savings and investments.
DISCLAIMER: All information presented on A2Z Cryptocurrencies (https://a2zcryptocurrencies.com) is purely for informational and educational purposes and does not amount to financial advice in any way. Please consult a financial advisor before investing.
