Bitcoin Rally Up to $125K is Possible: This Is Why

The key takeaways

• A total of $313,000,000 in Bitcoin short positions was liquidated. This signals the beginnings of a squeeze.

• Gold’s surge highlights the search for alternative investments as expectations of interest rate cuts gain momentum.

BitcoinBTCOn Thursday it flirted near the $121,000 mark, which was its highest level in 7 weeks. Bulls are confident and note that the current market conditions are much stronger than mid-August, when BTC briefly reached $124,000.

Bitcoin derivatives show that, beyond easing fears of recession and the gold’s support momentum, traders were taken off-guard, creating conditions often for a market short squeeze.

Bitcoin’s record-breaking price was reached in mid-August after gold had been stuck at $3,400 near the end of July. Global trade tensions were increasing at the time as the 90-day temporary tariff reduction for China by the United States ended on August 12. This fueled expectations of inflationary pressure.

Bitcoin profits are boosted by reduced inflation risk and the gold return

According to analyst estimates, the latest US Personal Consumption Expenditures price index, published Friday, indicated a 2.9% rise from August. As inflation was no longer seen as an immediate concern by traders, they gained confidence in the US Federal Reserve’s (Fed). They are now confident of further interest rate reductions.

Import tariffs did not negatively impact the US retail sales or trade balance in the short-term, which disappointed traders who purchased Bitcoins above $120,000. Bitcoin’s September advance coincided with an 16% increase in gold prices within six weeks. data The central bank accumulation is steady.

CME FedWatch shows that the implied probability for the US Federal Reserve to lower rates by January 2024 to 3.5% or less is now 40%. This was 18% at mid-August. Investors may welcome inflation’s current trajectory, but ongoing labor market weakness could challenge the recent S&P 500 all-time high, particularly amid uncertainty tied to the US government shutdown.

Philip Jefferson, vice-chairman of US Federal Reserve Federal Reserve Bank, voiced concerns about the employment market on Monday. “could experience stress” if left unsupported. Jefferson blamed the US president Donald Trump for his trade, immigration and other policies. according Reuters. He said that the effects of these changes are also reflected in his comments. “will further show in coming months,” The need for hedges is driving traders to find alternatives.

Sell pressure is reduced by the Bitcoin derivatives market and the AI sector.

Data from derivatives shows that traders had roughly the same odds on both upward and downward movements in the three days prior to Bitcoin hitting its high point at mid-August. The same BTC option indicator today signals moderate concern about a correction. Put (sell) and call (buying) options are trading at higher premiums.

CoinGlass reports that between Wednesday and Friday, more than $313 Million in leveraged short positions (sell) Bitcoin Futures were liquidated. data. The rally over $120,000 was a surprise to the markets, and this reduces the risk of big profit taking in the futures market if the bullish momentum continues.

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OpenAI’s record-breaking share sale of $500 billion at an open market valuation was another factor that eased short-term risk. Artificial intelligence was under increased scrutiny after US restrictions on exports of advanced AI chips to China, and Meta’s announcement to freeze its AI hiring.

Bitcoin’s trajectory to $125,000 is more likely now that investors are increasingly confident about interest rate reductions coming in the US. Gold’s constant momentum shows traders’ preference for alternative markets to the traditional equity and bond markets.

This is not intended as legal advice and shouldn’t be taken to be such. This article is solely for informational purposes. It does not represent or reflect Cointelegraph’s views.