After the release of the US Consumer Price Index (CPI) data, the value of Bitcoin rose rapidly, increasing by 5.2% in one day and briefly breaking through the $65,000 mark.
A market analyst pointed out that the key to predicting whether Bitcoin can break through its all-time high of $73,700 by the end of 2024 lies in monitoring a major economic indicator - the policy trends of the US Federal Reserve System. The analyst stressed that the Fed's monetary policy will directly affect market liquidity, which in turn determines the direction of Bitcoin and the entire cryptocurrency market.
Timothy Peterson, founder and investment manager at Cane Island Alternative Advisors, recently told Cointelegraph that high yields in the United States are a key indicator to watch for market movements. He pointed out that in order for the market to reach a sustainable all-time high, high yields need to fall below 6% or 7%.
He further explained that the main driver of Bitcoin prices is associated with changes in interest rates. Currently, according to data from YCharts, the yield on US high-yield bonds is 7.54%, and these bonds offer high returns due to their higher risk of default.
Peterson predicts that if the yield can be maintained between 6% and 7%, Bitcoin could reach an all-time high of $100,000 by the end of 2024 or the second quarter of 2025 at the latest.
A recent Reuters poll predicts that higher yields may follow the expected Fed rate cut, which is expected to happen in September. Rate cuts usually reduce the yields of traditional safe-haven assets such as bonds and time deposits, making high-risk assets such as Bitcoin an attractive option for investors seeking higher returns. Therefore, more and more funds may flow into the crypto market in search of superior yields.
Peterson noted that market volatility and flattening tend to be common from September to October. “Not every time, but it happens often,” he added. He also predicted that market uncertainty will continue into October as the U.S. election approaches, as the election is scheduled for November 4.
Meanwhile, Scott Melker, a cryptocurrency analyst known as the "Wolf of Wall Street," has a different view on the impact of the Fed's rate cuts. He expressed skepticism about the popular view in an X-platform article on May 14. "It is generally believed that the Fed's policy shift is beneficial to the market," he wrote, but warned that "rate cuts are often a prelude to a big drop," expressing a cautious view on the overall market trend.
