Bitcoin May Be At These Levels in September-October!

Crypto experts said they do not see the impending contraction of the Federal Reserve’s liquidity-boosting incentive program as a major drop in the Bitcoin market. In addition, experts touched on the statements of Jerome Powell and explained the possible consequences for the market. These levels are expected in September and October…

Pandemic has increased BTC price 10 times in 12 months

Fed Chairman Jerome Powell said on Wednesday that the U.S. central bank could begin to contract in the next quarter and end the program by mid-2022. John Ng Pangilinan, managing partner at Singapore-based Signum Capital, said he thinks globalization is a matter of time and that it has already been taken into account.

Since March 2020, the Fed has been purchasing $120 billion worth of assets per month through a monetary stimulus program known as quantitative easing or QE. Launched to contain the economic repercussions of the pandemic, the program has triggered unprecedented asset price inflation. First, Bitcoin (BTC) rose 10x to $64,801 in the 12 months to April 2021.

Partial negotiations began circulating in the first quarter of this year and strengthened in mid-May after the US reported its highest inflation in 13 years. Bitcoin slumped from $58,000 to $30,000 in the second half of May, perhaps in response to the increased likelihood of the Fed contracting. The move coincided with Tesla’s decision to suspend Bitcoin payments for its electric vehicles due to environmental concerns regarding cryptocurrency mining.

Are interest rate decisions determinants of Bitcoin price?

Anthony Vince, head of global trade at GSR, says:

Crypto (the world) is not paying much attention to quantitative easing (incentive) and there is definitely a lot of money circulating in the system even though it is currently looking to invest in crypto projects.

Indeed, the Fed will not only shut down the money writer next quarter, and the program will be phased out in six to eight months, assuming there are no new shocks to the economy. Borrowing costs are likely to remain below the pre-pandemic high of 2% for a long time, as the central bank pushes the timing of the first rate hike to 2022.

Bitcoin has shown no signs of weakness since Powell signaled weakness at his press conference on Wednesday. The cryptocurrency is trading at $43,838 at press time, which represents a 1.5% gain on the day after rising 7% on Wednesday. This was the biggest single-day gain since August 13. Matthew Dibb, co-founder and COO of Stack Funds said:

Since the Federal Open Market Committee (FOMC), markets, including equities, have continued to rise. We do not see any short-term risk from this flow to cryptocurrencies.

It may be too soon to say bottom in Bitcoin price

Stack Funds’ Dibb has been watching closely the 11% recovery of Bitcoin (BTC) from recent lows to near $40,000. “It is too early to tell if Bitcoin has bottomed out,” Dibb told CoinDesk in a WhatsApp chat, adding:

After some positive macro headlines, we’ve seen some good spot buying flows over the past 24 hours; but some fear it’s a ‘dead cat bounce’ after a heavy and fast sale that needs to be backed up

Pangilinan of Signum Capital marked this level for the continuation:

Bitcoin (BTC) currently needs above $45,000 for the trading range to be safe.

A dead cat bounce is a temporary improvement in price after a significant drop from speculators squaring bearish positions. In the three days leading up to Sept. 21, Bitcoin dropped from $49,000 to $40,000 as investors sold risks amid fears that the crisis in Chinese real estate giant Evergrande would spread to the global economy. Fears from the Fed and renewed crypto regulators have added to uncertainty in the market.

The Fed is now out of the way and Evergrande fears seem to be easing with media reports suggesting that China may take over the cash-strapped real estate developer. However, regulatory risks may be lingering and preparing to loot. “Regulation clarity is the main threat to crypto growth right now, I would say that increased clarity will allow institutions to enter the market as they have a very rigid registry stack to adhere to,” said Vince of GSR.

Vince from GSR:

Regulatory clarity is the main threat to crypto growth right now, I would say increased clarity will allow institutions to enter the market as they have a very rigid registry stack to adhere to.

Earlier this week, US Securities and Exchange (SEC) Commission Chairman Gary Gensler renewed the call to regulate the crypto industry and compared stablecoins to poker. According to a New York Times article, regulators may designate stablecoins as systematically risky or treat them like securities or banks.

Stablecoins, or cryptocurrencies whose values ​​are pegged to a reference such as the US dollar, are widely used to finance cryptocurrency purchases and as collateral in decentralized finance. Its market capitalization has grown from $20 billion to over $100 billion in one year. As such, regulatory pressure on stablecoins poses a short-term risk to Bitcoin and the broader crypto market.

Announced September-October forecasts for Bitcoin price

“Many headlines, including Gensler’s remarks, have certainly impacted BTC’s short-term sentiment,” said Dibb of Stack Funds.

While this will be an ongoing saga, we are seeing some promising signs of regulatory improvement, including some fresh optimism that a physical or future-based (equity-traded fund) might soon get the green light.

Finally, Vince said, “Maybe Dubai becomes a crypto hub to take advantage of this uncertainty and offer a safe haven,” adding that Bitcoin will eventually resume its uptrend. Here are Vince’s September and October predictions for Bitcoin:

I see BTC crossing $50,000, September and October are traditionally pretty volatile months as the market returns from the summer break.

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