By Michael Scott
The favorable tailwinds in the US presidential election and rate cuts could fuel Bitcoin above $64,000 and soar to new heights.
Bitcoin has been the center of crypto action, witnessed recently, by staging a dramatic comeback following the sharp decline early this month. The unexpected U-turn is a big reprieve for investors scrambling for answers as analysts ruled out the upside momentum in price.
The rapid reversal saw Bitcoin price clinch at a 21-day high level on Friday. It aligns with the flip in the BTC bull-bear market cycle indicator from bearish to bullish a few days after suggesting further trouble ahead.
Sudden U-Turn in Bitcoin
The Friday surge in Bitcoin price shows a sudden departure from the prolonged downturn forecasted for Q3. The bullish shift in Bitcoin saw gains extend into the weekend as BTC traders were optimistic several tailwinds could catalyze the price to new heights in the coming months.
A key tailwind is the US Federal Reserve (Fed) move to end the hawkish stance behind the rate hike regime to the July 2023 peak target range of 5.25%-5.5%.
Additionally, analysts single out the outcome of the November presidential election as a tailwind for price upside. The contest outcome between the Grand Old Party (GOP) candidate Donald Trump and Vice President Kamala Harris could decide the country’s crypto policy direction.
The Fed’s chair Jerome Powell, hinted at potential rate cuts in September, citing the central bank’s satisfaction with the cooling inflation. The Fed appears to prioritize resolving the growing weakness within the labor market.
The optimism created by rhetoric is driving the risk assets to higher heights. BTC leads the charge, with gains lifting the bellwether asset above $62,000 for the initial time since August 2.
The Bitcoin sustained the rise into the weekend to test levels shy of $65,000. However, CoinGecko data shows BTC lost a bit of steam to change hands near $64,000.
The favorable data portrayed by the US labor market adds to the investor convictions the Fed would likely announce cut rates in September.
Favorable data from the U.S. labor market added to investor convictions the central bank would likely cut rates in September. Merkle Tree Capital’s chief investment executive noted that the Bureau of Labor Statistics indicated a revision of 818,000 jobs.
Merkle Tree Capital’s Ryan McMillin noted that the revision matched the new opportunities in previous months from the non-farm payroll data.
The crypto fund manager executive considers the data crucial in advancing the hot jobs market narrative. Such hardly occurred in the US labor market.
McMillin observes that the selling pressure follows the liquidation of Bitcoin reserves by the German and US governments. Also, the Mt.Gox and Genesis redistribution, causing potential dumping, appears in the rear.
McMillin considers the prevailing circumstances could set Bitcoin momentum to buck the historical weakness experienced in September. The investment head considers Bitcoin positioned for a break out that will set a new all-time high.
Bitcoin Breakout Imminent
The investment executive observes that a strong rally is likely before Q4, marking a reversal of Bitcoin trading sideways for six months. Notably, the BTC has oscillated within the $49,000 – $71,000 range since late February.
The price movement has leveraged influence since the US Securities and Exchange Commission (SEC) approved bids for spot exchange-traded funds (ETFs). Bitcoin navigated the slump to set an all-time high in March.
QCP Capital echoes McMillin’s sentiment in a Friday note to the investors. The firm informed the investors that Bitcoin had regained trading within the familiar $61K-$70K range.
QCP illustrates the selling supply is witnessing gradual depletion. The firm notes that the spot ETFs have realized net inflows in ten days, suggesting investor preference for BTC.
QCP attributes Friday’s rally to spot-driven, adding that the market could witness increased long positions. Such is possible if the BTC sustains the $62,000 price tag till the end of the summer holidays.
The upside price could prompt traders to borrow funds for investment. Such will likely arise among traders betting that the BTC price will rise.