Home Ethereum Bitcoin Could Hit $35,000 by Year End as Inflation Cools, Analyst Says

Bitcoin Could Hit $35,000 by Year End as Inflation Cools, Analyst Says

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Bitcoin Could Hit $35,000 by Year End as Inflation Cools, Analyst Says

The Street may notice an inverse correlation: the colder the inflation, the hotter the Bitcoin price. But how strong this relationship is – and how long it could last – is the question.

Inflation data, according to the consumer price index (CPI), cooled on Wednesday, registering a 8.5% overall price year-over-year increase in July – single digit unchanged the previous month, and below expectations. The loyal cryptocurrency Bitcoin, whose relationship with inflation has long been a topic of debate (even if it seems obvious it was not an inflation hedge) grabbed headlines, climbing nearly 3% late afternoon on Wednesday (it was up more than 4% earlier in the day). And according to some experts, the price could rise much more if the current inflationary trend persists.

“I think for the rest of summeryes, inflation data [and] Fed talk will dictate where Bitcoin goes,” said Edward Moya, senior market analyst at Oanda. Fortune. “Bitcoin is still strongly correlated to stocks right now, especially the NASDAQ“, he notes, “and this inflation report has given a lot of hope that the Fed will not need to be so aggressive with a tightening policy in the future.

The Federal Reserve’s rate hikes have been a big deal of angst for equity and crypto investors, and all eyes are on the Fed’s September meeting. “Remember, crypto is the longest of long-lived assets, and long-lived assets want low interest rates,” said Leigh Drogen, general partner and CIO of the Digital Asset Quant Hedge Fund. Starkiller Capital, based in Texas. Fortune.

Oanda’s Moya expects a “choppy” summer for Bitcoin trading, but “if there’s momentum coming back into the space, you know, we might be surprised here at how much Bitcoin can go up”.

How much higher exactly? If things continue to move in this direction with inflation, the “maximum upside move could be $35,500” for Bitcoin, Moya predicts, which could come at the “end of the year.” Coincidentally, the CEO of exchange giant FTX Sam Bankman-Fried also raised $35,000 as a bullish price for Bitcoin by the end of the year.

But for that to happen, cooling inflation is “a big part of it,” says Moya. “You need to hear more from the Fed saying they’re happy with the way inflation is showing signs of easing,” and the data continues to show falling prices, while the economy shows more “modest growth.” of employment” and general signs of health “enough to support the consumer and support the appetite for risk in general,” he believes. Moya also suggests that, on the institutional side, more news from “corporate as BlackRock embraces companies like Coinbase… really going to be the driver here.

According to Drogen, the crypto coins that have outperformed in the markets lately “all have something to do basically with [Ethereum, or ETH] or the ETH merger. That’s what had happened until now, basically, ”he says. Fortune. Going forward, he thinks that “if Bitcoin can get out of that range it was in, it’s most likely going to head towards $28,000″, and from there probably $32,000 – as long as the dollar” keep on going”.[s] to falland the NASDAQ continues “to have an upward trend”.

The “ping pong” of Bitcoin?

Although there are signs that the price of Bitcoin could rise by the end of the year, the crypto winter is underway, and the industry is still reeling from the implosion of several major companies and protocols. And gloomier developments in the macroeconomy could hamper Bitcoin’s recovery. Oanda’s Moya expects energy prices to rise later this year, due to things like China reopening after shutdowns and the shutdown of the Strategic Petroleum Reserve (SPR) released, which could create “potentially a sharp rise in oil and energy prices” and complicate inflation trading, Moya predicts. In the shorter term, he suggests Bitcoin could “ping-pong” around $20,000-$28,000 (he expects “major” resistance at $28,500).

Meanwhile, Drogen argues that the ETH merger, where Ethereum will move its consensus mechanism to proof-of-stake from proof-of-work, has generated a lot of interest in Ethereum and Ethereum-related assets and away from Bitcoin. “A way that [Bitcoin] could really suffer is if the meltdown happens, and there’s a huge flow of capital out of bitcoin and into ETH, and there’s a huge narrative about how bitcoin takes a lot of energy and ETH is clean – it could definitely hit him,” says Drogen, although he notes that most cryptocurrencies are highly correlated, it’s “unlikely you’ll see Bitcoin go down significantly while everything else goes up.”

Ultimately, the pair sees Bitcoin ending the year up. And in the meantime, crypto investors will likely keep those CPI impressions in the corner of their eye.

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