Despite Bitcoin's recent surge, CoinShares forecasts that its price could drop below $80,000 in the short term. According to the firm, a sustained breakthrough above this level would require a clear indication from the Federal Reserve that it will not conduct further monetary policy tightening.
As per the assessment published by CoinShares, Bitcoin's recent rise is driven more by macroeconomic conditions than by events specific to the cryptocurrency market. Moderate inflation in the US and data indicating a weakening labor market have reduced expectations that the Fed will take more aggressive steps in its monetary policy.
The company noted that, despite the hawkish tone in the latest Federal Open Market Committee (FOMC) meeting minutes, data published after the meeting is increasingly weakening the likelihood of further monetary policy tightening. It was also stated that Bitcoin, sensitive to expectations regarding liquidity and changes in real interest rates, has reacted sharply to these developments.
According to CoinShares data, the decline in yields of short-term US Treasury bonds indicates that investors do not expect further interest rate hikes from the Fed. Conversely, high yields on 30-year Treasury bonds suggest that concerns about US fiscal prospects and the sustainability of government debt persist.
Analysts noted that the combination of expectations for monetary policy easing and concerns in the long-term bond market has historically created a favorable environment for Bitcoin. They also pointed out that potential intervention by the US Treasury Department in the long-term bond market could be stronger than markets anticipate.
CoinShares analysts noted that Bitcoin's rise was triggered by large-scale liquidations of short positions, and blockchain data showed that large investors have begun accumulating assets again. However, the company expects the $80,000 level to remain a critical upper resistance for Bitcoin unless the Fed explicitly confirms a shift in policy risks.
*This is not investment advice.
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