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Bitcoin (BTC) Price Analysis: Key Factors for The Coming Months

Bitcoin (BTC) Price Analysis: Key Factors for The Coming Months

Recent Bitcoin price movement is due to relaxed Federal Reserve policies, market sentiments, and increased speculative investments.

In recent weeks, Bitcoin saw its price soar by approximately forty percent since the start of the month. This increase prompts important questions about the consistency of this increase and whether Bitcoin’s value will continue to rise at this manner.

Bitcoin made an impressive recovery in the last few weeks, despite having a correction recently.

Fed’s Rate Hikes and Price Implications

Before we dive into the durability of Bitcoin’s latest surge, it’s important to understand the main causes of the current rise in Bitcoin’s value. The stringent monetary policy from the Federal Reserve primarily led to Bitcoin’s sharp price fall. 

Recently, though, the Federal Reserve has made a shift in its policy, transitioning to a less aggressive stance. It seems highly probable that the Federal Reserve will only nudge interest rates up by 25 basis points in the next month, indicating a change in their outlook as inflation rates subside.

Bitcoin’s price also benefits from what’s known as a ‘risk-on rally’. There’s a strong positive correlation between Bitcoin’s value and the S&P 500 index. This means as the index rises, Bitcoin’s price tends to follow. So, as long as the risk-on rally persists, there’s potential for Bitcoin’s price to continue its climb.

Market Sentiment

Market observers believe that despite significant setbacks, such as the FTX collapse, Bitcoin has proven resilient. This outlook has led to speculation among Bitcoin HODLers that the challenging ‘crypto winter’ phase might be coming to an end, heralding a period of growth for digital currencies.

Two key factors in the crypto market are critical to watch in this context. First, the market is witnessing an increasing trend of speculative investments. If Bitcoin’s price rises, other cryptocurrencies are likely to follow suit. If Bitcoin’s price starts climbing, it could trigger a Fear of Missing Out (FOMO), causing more speculative investments to flow into the cryptocurrency market, potentially pushing Bitcoin’s price even higher.

Secondly, if the Federal Reserve indeed decides to slow the pace of hiking interest rates, it could potentially weaken the dollar. This development could have a dual impact on Bitcoin’s price. It could fuel the risk-on rally, which would be good for Bitcoin. Conversely, a decrease in the value of the dollar might also boost Bitcoin’s price.

Technically speaking, Bitcoin’s current price seems to approach in the oversold territory, as indicated by the Relative Strength Index (RSI) on a daily timeframe. Other daily indicators also suggest room for growth given the recent correction in the price of BTC. 

 If Bitcoin’s price can break through the significant resistance level of $30,000 and sustain above it, it could maintain this momentum in the longer run and continue rising in the last two quarters of the year.

BTC/USD 1-Day Chart.

BTC/USD 1-Day Chart. Source: Trading View

Current Market Activity and Bitcoin Whales

Interestingly, Bitcoin has seen a decline in transfer volume on its network, perhaps indicating a prevailing holding sentiment in the market. Many investors may be holding onto their Bitcoin, waiting for its value to rise before they start moving their assets. At the same time, a significant increase in ‘whale‘ activity has been observed in Bitcoin’s derivatives market, indicating a rise in selling pressure.

Bitcoin Whale Activity.

Bitcoin Whale Activity. Source: Crypto Quant

Bitcoin’s on-chain transfer volume has declined since the end of 2022. However, this does not signify a lack of growth in the network. Instead, the number of active addresses has increased, while token transfers remain stagnant. 

Bitcoin Volume & Active Addresses.

Bitcoin Volume & Active Addresses. Source: Crypto Quant

With Bitcoin’s price struggling to consistently cross the $30,000 mark, holders may be hesitant to move their assets. During this period, there has been a significant inflow of institutional investors, which could trigger a demand shock due to the limited supply.

Political Climate Around Bitcoin

In a related development, Florida’s governor, Ron DeSantis, has pledged to put Bitcoin on the pedestal if he wins the presidential election. DeSantis promised to end what he describes as the current administration’s war on Bitcoin and cryptocurrencies. He expressed his aversion towards a digital dollar or a central bank digital currency (CBDC), citing the risk of financial surveillance. CBDCs are considered by many to consolidate economic power in the hands of the issuing government, a concept DeSantis strongly opposes.

Crypto and Bitcoin in particular is becoming a focal point in political discussions. Interestingly, electoral cycles coincide with Bitcoin halving events, which is usually followed by a bull market. It will be interesting to see how crypto will play a role during the upcoming electoral campaign, given that many crypto companies donate to political parties for their own personal interests.

Whether Bitcoin can maintain its current price with all the market uncertainty at the moment remains to be seen. Nonetheless, even if BTC dips in the coming months, experts believe that its price may potentially reach new heights in 2024.


About Dren Hima

Being exposed to the crypto industry for the last few years has given me valuable experience with market analyses (technical and fundamental) as well as blockchain technology in general. As the content editor and a market analyst of Walletor, I strive to share the latest developments of the crypto industry, while also providing a unique educational experience for all Crypto & FinTech enthusiasts.

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