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Investors made a great start to 2024, and the price of Bitcoin saw its peak even before the halving event. This surge in BTC has opened doors to even greater peaks and triggered massive rallies in altcoins. So, what comes next? What do the current data tell us about the future of prices?
Bitcoin (BTC) and Inflation
Following the recent 3.2% inflation rate, some experts began to claim that Bitcoin is being used as a hedge against US monetary policy. However, this is not very convincing because, during the same period, US stock markets and other risk assets also gained value. Moreover, Gold also reached its all-time high.
If the fight against inflation is to last longer, it will mean the Federal Reserve’s tight monetary policy will continue for an extended period, and pressure on risk markets could intensify. As we entered 2024, while there was an 80% expectation of an interest rate cut in March, today it has nearly dropped to zero, and there’s little optimism left for the May meeting.
Will Bitcoin Reach $80,000?
Looking from a macroeconomic perspective, a lasting rise depends on Spot Bitcoin ETFs being more widely adopted as a store of value. Before 2024, Bitcoin was not easily accessible by the majority of investment funds and asset managers, but ETFs have now paved the way.
So, if Bitcoin is to prove itself in the fight against inflation, all the conditions are now favorable. Additionally, regulatory uncertainty and the issue of whether it is classified as a commodity have also been confusing, and this has been resolved.
In the last two weeks, ETFs have attracted approximately $5 billion in capital, making the sector attractive to institutional investors. However, the excessive leverage in futures trading is worrying some experts. Bitcoin’s total open interest in futures reached its highest level ever on March 13th, at $35 billion, with the size of long positions continuing to increase.
Data shows that whale and market maker positions on Binance and OKX increased their net long positions between March 10 and March 13. While this seems to set the stage for massive downturns due to potential large liquidations, it also suggests that the environment necessary for a new historic peak is continuing to develop. Therefore, a short-term continuation of this excessive demand could make $80,000 possible, albeit briefly. However, sustained long-term growth requires more.
