If Bitcoin's return rate reaches 46% within three months after hitting a new high, it could approach $100,000 in Q1 2025.
Author: Ecoinometrics
Compiled by: Deep Tide TechFlow
Today's topics include:
The driving forces behind Bitcoin's historical highs
Bitcoin's performance exceeding expectations in October
Slight interest rate cuts
Each topic is accompanied by a brief explanation and a detailed chart. Let's dive in.
The Driving Forces Behind Bitcoin's Historical Highs
Bitcoin performed exceptionally well during the U.S. elections. Not only did it successfully break through the $65,000 mark, but it is also pushing towards new historical highs. This positive momentum is likely to be self-reinforcing.
Based on historical data, we can make predictions: the average return rate of Bitcoin within three months after hitting a new high is 46%, with a median of 39%.
This means that if Bitcoin's return rate reaches the average level, it could be close to $100,000 in Q1 2025.
To achieve this goal, Bitcoin only needs to attract sufficient capital inflow from ETFs. The current trend is very optimistic, so we need to closely monitor this dynamic.
Bitcoin's Strong Performance in October
In fact, even before the U.S. presidential election, Bitcoin was already performing quite well.
In October, it was one of the few global assets to achieve positive returns, alongside gold. This is not the first time we have discussed this.
The strong performance of Bitcoin and gold over the past 12 months indicates that global macro investors are seriously concerned about the threat of dollar depreciation.
Unless the federal government suddenly takes fiscal responsibility measures, U.S. debt will face an unsustainable trend. Once a certain critical point is reached, this debt will have to be monetized through the Federal Reserve.
It is not a question of "if," but rather "when."
Maintaining at least a portion of Bitcoin in your portfolio as a hedge is a strategy you cannot ignore.
Slight Interest Rate Cuts
Regarding debt monetization, the Federal Reserve has not yet taken action.
The more pressing issue currently facing the Federal Reserve is ensuring that core inflation remains under control without harming the U.S. economy.
As we have discussed multiple times, current data shows:
Core inflation is not showing a downward trend
The labor market is stable, with unemployment at historical lows
This means that a gradual strategy of slight interest rate cuts in the coming months is the only reasonable choice for the Federal Reserve.
This is precisely the focus of discussion at this week's FOMC meeting. Meanwhile, the size of the Federal Reserve's balance sheet continues to shrink.
This monetary policy will not lead to rapid growth in the money supply, but it is not entirely negative for Bitcoin.
Therefore, as long as Bitcoin's upward momentum exists and ETF capital inflows continue, the Federal Reserve's actions should not have an impact on it in the short term.
That's all for today. I hope you enjoyed it. Next week, we will bring more exciting chart analyses.
Best wishes.
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