- The US high yield rate has to drop below 6-7 percent before Bitcoin can hit an all-time high.
- Relatively large inflows into Bitcoin exchange-traded funds recently suggest strong investor interest.
Analysts and enthusiasts for cryptocurrency are always talking about forecasting the next big move in Bitcoin. The activities of the US Federal Reserve stand out as one key factor in determining whether Bitcoin can surpass its all-time high of $73,700 later in the year.
Bitcoin has to hit a sustainable all-time high if the U.S. high yield rate falls below 6 or 7%, claims Timothy Peterson, founder of Cane Island Alternative Advisors. In highlighting the significance of interest rate fluctuation in Bitcoin’s price action, he said:
“The U.S. high yield rate is a great indicator.”
YCharts data shows that as of right now, the U.S. high yield rate—which is the rate of high-yield corporate bonds because of their increased risk of default—is 7.24%. For analysts like Peterson, who think a decline in this rate could pave the way for Bitcoin’s next significant price surge, it is an essential indicator.
Future of Bitcoin Price
About the future of Bitcoin, Peterson is upbeat. He projects that by the fourth quarter of 2024, or at the latest, the second quarter of 2025, BTC will hit the much-anticipated $100,000 price tag, assuming yield rates stay within the “6 or 7%” level. The course of interest rate policy by the Federal Reserve will greatly influence this forecast.
The high-yield rate usually tends to drop along with interest rate reductions by the Federal Reserve. Almost two thirds of analysts think this rate decrease will occur in September of this year, according to a recent Reuters poll.
Lower interest rates typically translate into lower yields for investors in term deposits and bonds, which drives more investors into riskier assets like Bitcoin in search of higher returns.
Result on Investor Behaviour
For cryptocurrency traders, interest rates are considered to be an important metric. The lower yield from safe assets like bonds when rates are decreased encourages investors to look for larger returns in riskier assets, such as Bitcoin.
This change might have a significant impact on Bitcoin’s market dynamics, which could lead to higher investment and price increases.
Generally speaking, Peterson says, markets are “flat and volatile” between September and October.
Though election day is set for November 4, he notes that this isn’t usually the case and that the approaching U.S. election later this year is expected to heighten uncertainty until October. This political element might have a bigger impact on investor behavior and market volatility.
Reactions to Rate Cuts
On how Fed rate reductions will affect things, not all analysts concur. Scott Melker, a cryptocurrency expert better known by his stage name “The Wolf of All Streets,” asserts that interest rate cuts aren’t always advantageous for assets other than fixed-income investments.
Everyone seemingly wants the Fed to cut rates.
There is a wildly popular theory that a Fed pivot is good for markets.
It is patently FALSE.
After the Fed pivot to rate cuts, the market almost ALWAYS crashes/corrects.
Rate cuts generally precede major dips.
Let's look at… pic.twitter.com/Hu1rzghBBM
— The Wolf Of All Streets (@scottmelker) May 14, 2024
Notable Market Movements
CoinMarketCap reports that the price of BTC at the moment of writing is at $61,902.30, slightly up 0.45% over the previous day. It has, nevertheless, decreased by 0.43% throughout the last seven days. This price swing highlights the level of market volatility right now.
Yesterday, in line with what ETHNews previously disclosed, there were also not insignificant net inflows into U.S.-based Bitcoin ETFs, with the Fidelity ETF receiving the largest amount ($38.5731 million).