If Bitcoin's return reaches 46% within three months after hitting a new high, Bitcoin could approach $100,000 in Q1 2025.
Author: Ecoinometrics
Compiled by: Deep Tide TechFlow
Today's topics include:
The driving force behind Bitcoin reaching new historical highs
Bitcoin exceeded expectations in October
Slight interest rate cut
Each topic comes with a brief explanation and a detailed chart. Let's take a look.
The driving force behind Bitcoin reaching new historical highs
Bitcoin performed excellently during the U.S. election. Not only did it successfully break through the $65,000 mark, but it is also pushing towards new historical highs. This good momentum will be self-reinforcing.
Based on historical data, we can make predictions: the average return of Bitcoin within three months after hitting a new high is 46%, with a median of 39%.
This means that if Bitcoin's return reaches the average level, Bitcoin could be close to $100,000 in Q1 2025.
To achieve this, Bitcoin only needs to receive sufficient inflow of funds from ETFs. The current trend is very optimistic, so we need to closely monitor this dynamic.
Bitcoin performed excellently in October
In fact, even before the U.S. presidential election, Bitcoin has already performed quite well.
In October, it was one of the few global assets that achieved positive returns, the other being gold. This is not the first time we have talked about this.
The good performance of Bitcoin and gold over the past 12 months indicates that global macro investors take the threat of U.S. dollar depreciation seriously.
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.
This is not a question of 'whether', but 'when'.
Keeping at least a portion of Bitcoin in your portfolio as a hedge is a strategy you cannot ignore.
Slight interest rate cut
Regarding debt monetization, the Federal Reserve has not yet taken action.
The more pressing issue currently facing the Federal Reserve is to ensure that core inflation remains under control without harming the U.S. economy.
As we have discussed multiple times, the current data shows:
Core inflation is not showing a downward trend
The labor market is stable, and the unemployment rate is at a historical low
This means that a slow strategy of slight interest rate cuts by the Federal Reserve in the coming months is the only reasonable choice.
This is precisely the focus of 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 money supply, but it is not entirely negative for Bitcoin.
Therefore, as long as Bitcoin's upward momentum exists and ETF inflows continue, the Federal Reserve's actions should not impact it in the short term.
That's all for today. Hope you enjoyed it. Next week, we will bring more exciting chart analyses.
Best wishes.
