Bitcoin’s Propensity for Rally: FTX Payout and Fed Policy Shift

Cryptonews John Brightwater September 24, 2024

Bitcoin’s Propensity for Rally: FTX Payout and Fed Policy Shift

Bitcoin is potentially positioned for a significant rally by late 2024, as highlighted in the 10x Research report, which connects this potential with the anticipated FTX payout of $5 to $8 billion and Federal Reserve monetary policy adjustments. Seasonality and macroeconomic conditions are also discussed as key influencers, while caution is warranted due to past volatility and drawdowns.

Recent analyses suggest that Bitcoin may be on the cusp of a considerable rally by late 2024, as highlighted in the latest report by 10x Research. The document addresses the current volatility within the cryptocurrency market, while underscoring the significant forces, including seasonal patterns, that could influence its trajectory. Markus Thielen, the founder of 10x Research, emphasized the importance of the impending FTX payout, with the anticipated inflow of $5 to $8 billion likely to generate a bullish sentiment among investors. He stated, “There’s a possibility of a melt-up in risk assets, as the Fed [United States Federal Reserve] seems to have raised the level of the S&P 500 at which they would intervene to protect investors, signaling the potential for further rate cuts — often referred to as the ‘Fed put.’” This development could prompt many to reassess their investment strategies in preparation for the year 2025. Additionally, the report posits the possibility of a repetition of favorable seasonal patterns witnessed in previous market cycles from 2014, 2017, and 2021, while acknowledging a contrarian bearish perspective that had prevailed since March/April 2024. Multiple external factors acting as potential catalysts for Bitcoin’s year-end performance include the existing liquidity in the market, macroeconomic conditions stemming from Federal Reserve decisions on interest rates, inflation concerns, and dynamics associated with the upcoming U.S. elections. Yet, it is essential for investors to remain cautious, as the report points out Bitcoin’s propensity for significant drawdowns in prior cycles, sometimes reaching as high as 70%. “The two key levels to watch for Bitcoin are the previous cycle high of $68,330 and the 21-week moving average… Managing trades around these levels is essential for effective risk management… This may involve selling during volatile periods, even at less-than-ideal levels.” Moreover, the report draws comparisons between Bitcoin’s performance and the significant rise in gold prices, which have surged over 5% since September 9. This spike can be attributed to geopolitical tensions and interest rate cuts, with gold achieving a record price of $2,629 per ounce as of September 23, following a 0.5% cut by the Federal Reserve on September 18. Analysts within the crypto domain are currently evaluating the implications that Bitcoin’s price fluctuations may have in response to this robust rise in the gold market.

Bitcoin, the leading cryptocurrency, has been experiencing a volatile year, reflecting the intricate dynamics of the cryptocurrency market which are influenced by both macroeconomic factors and investor sentiment. The anticipated payout from the FTX bankruptcy, combined with Federal Reserve actions, presents a potentially transformative shift for Bitcoin’s market performance. Seasonal trends observed in previous years may further dictate Bitcoin’s trajectory towards the end of 2024, as investors navigate the implications of these developments on their portfolios.

In summary, the outlook for Bitcoin suggests a potential rally driven by the expected FTX payout and supportive macroeconomic conditions. Although historical trends indicate favorable seasonal patterns, the history of significant market drawdowns necessitates cautious risk management strategies. Investors are advised to monitor critical price levels closely as they prepare for potential shifts in the cryptocurrency landscape.

Original Source: cointelegraph.com