Factors Influencing Potential Quarter-End Bitcoin Price Rally
Bitcoin’s price has recovered recently, aided by favorable CPI data and potential quarter-end fund rebalancing that could increase prices. The yen’s downward pressure and rising global liquidity could support the crypto market, despite ongoing concerns about economic volatility and geopolitical risks.
The cryptocurrency market experienced a recent stabilization, with Bitcoin briefly surpassing the 200-day simple moving average at $84,000. The market sentiment has improved following a lower-than-expected U.S. Consumer Price Index (CPI) report, supporting traders’ expectations of four interest-rate reductions by the Federal Reserve this year. Memecoins, along with layer-1 and layer-2 blockchain tokens, along with AI tokens have driven this recent recovery.
Nevertheless, several challenges such as tariffs imposed by President Trump, recession anxieties in the U.S., and bond market volatility continue to raise concerns about the sustainability of this recovery. In contrast, two factors suggest potential support for a quarter-end Bitcoin price rally. The first point is quarter-end rebalancing, as funds that have become overly concentrated in bonds may begin reallocating towards equities as the quarter concludes, likely resulting in higher stock prices that could positively influence Bitcoin and the crypto market.
The second factor involves the Japanese yen, which has faced pressure due to potential market stabilization effects from overextended bullish positions in the currency. As U.S. bond yields increase due to rebalancing, the yen may weaken, and the unwinding of yen carry trades may alleviate risk-off sentiments temporarily, therefore enhancing opportunities for risk-taking globally.
Additionally, the increase in net global liquidity, primarily attributed to trends in China and the U.S., could also thaw risk-taking. “Net global liquidity, largely due to China and the U.S., is increasing,” stated Two Prime, an SEC-registered investment adviser, indicating positive effects on the cryptocurrency market.
Traders should remain cautious of volatility; data from Deribit highlights significant negative dealer gamma between $81,000 and $87,000, meaning that pricing fluctuations could increase as dealers attempt to balance their market exposure. Upcoming economic indicators, such as the February Producer Price Index report and weekly jobless claims data, are slated for release today, which could further impact market dynamics.
In summary, the cryptocurrency market is experiencing a brief recovery, supported by favorable CPI data and potential quarter-end rebalancing. However, traders must remain vigilant about various economic pressures, including geopolitical factors and macroeconomic indicators. Both the stabilization of the yen and increasing global liquidity present opportunities for Bitcoin and broader crypto markets, yet inherent market volatility necessitates cautious trading strategies.
Original Source: www.tradingview.com
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