The Factors Driving Bitcoin’s Rise to $200,000

Cryptonews Economy John Brightwater August 20, 2024

The Factors Driving Bitcoin’s Rise to $200,000

Bitcoin’s highly-anticipated bull run has encountered a setback, but there are several factors that could change its trajectory. Despite a 40% increase in price since the beginning of the year, Bitcoin has yet to realize the bull run that was previously forecasted. However, many market observers believe that the cryptocurrency still has the potential to skyrocket to $200,000 within the next year or so. Here are three reasons why the Bitcoin bull run may just be getting started.

The Federal Reserve
As attention shifts to Jackson Hole, Wyoming, all eyes are on Federal Reserve Chair Jerome Powell. It is widely anticipated that Powell will provide hints about potential interest rate cuts at the September meeting. Market confidence in such a move is evident, with CME FedWatch data indicating a 100% probability of interest rate cuts. The cooling inflation data is viewed as paving the way for a rate cut, which, according to analysts, will lead to a weaker dollar, greater global liquidity, and a higher appetite for risk, all factors that could fuel the next rally.

The impact of a rate cut is seen as positive for assets like cryptocurrencies, as investors are incentivized to move away from low-risk Treasury bonds and shift their focus to higher-return assets. This, coupled with a weaker dollar, could prepare the ground for Bitcoin’s next leg to new record highs.

The Election
The upcoming November elections in the US are also being closely watched by crypto enthusiasts. The choice between Trump, who has consistently made pro-industry statements, and Harris, whose stance on crypto is less clear, is a key consideration. Some have even attributed a market dip in August to Harris overtaking Trump in the polls, leading to a resurgence of uncertainty. Analysts expect Treasury Secretary Janet Yellen to boost liquidity by infusing as much as $1 trillion into the markets if Harris emerges victorious. This could potentially propel Bitcoin to $100,000, according to experts.

The AI Boom
The surge in artificial intelligence (AI) has been a significant driver for tech stocks, which in turn has been beneficial for cryptocurrencies. Investors are planning to invest hundreds of millions of dollars at the intersection of AI and crypto. Additionally, cash-strapped Bitcoin miners are diversifying their income by providing processing power for AI developers. Analysts believe that the AI data centers powered by Bitcoin mining infrastructure will help mitigate pricing blows from macro factors.

In July, analysts projected that these factors, combined with investor interest in Bitcoin exchange-traded funds, could propel Bitcoin’s price to $200,000 by the end of 2025. Further long-term projections anticipate the price to reach $500,000 in 2029 and exceed $1 million by 2033.

In conclusion, while the Bitcoin bull run may have hit a rough patch, there are several factors, including potential interest rate cuts, the outcome of the US election, and the surge in AI, which suggest that the cryptocurrency’s rise to $200,000 may be on the horizon.

Eric Johansson
News Editor, DL News