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

Takeaways from the conference:

• 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, its highest in seven week. Bulls continue to be confident. They note that conditions today are stronger than in mid-August at which time BTC briefly hit $124,000.

Bitcoin derivatives show that, beyond easing fears of recession and the gold’s support momentum, traders were taken off-guard, creating a situation which can often lead to 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. The global trade tensions at that time were increasing as the United States’ temporary 90-day tariff cut on China imports expired on August 12, leading to expectations of rising inflationary pressure.

Bitcoin gains are favored by reduced inflation risk and the gold return

In line with analysts’ expectations, the most recent US Personal Consumption Expenditures Index released on Friday showed a 2.9% growth 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.

The traders who had purchased Bitcoins over $120,000 back in August were disappointed. At least for the near term, import tariffs didn’t negatively affect retail sales in the US or the trade balance. Bitcoin’s September advance coincided with an 16% increase in gold prices within six weeks. data Points to the steady accumulation of central banks.

CME FedWatch shows that the implied probability for the US Federal Reserve to lower rates by the end of 2024 to 3.5% or less is now 40%. This was 18% at the beginning of 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, the Vice-Chairman of the US Federal Reserve, expressed concern about the state of labor on Monday. “could experience stress” if left unsupported. Jefferson said that the US President Donald Trump’s policies on trade, immigration, etc. were to blame for this pressure. according Reuters. These effects, he added, are not new. “will further show in coming months,” Traders are encouraged to seek out alternative hedge instruments.

Reduced concerns about AI and Bitcoin derivatives reduce the sell-off pressure

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 BTC Options indicator, which signals the fear of a possible correction today, shows a slight increase in put options (sale) compared to call options (buy).

CoinGlass reported that more than 313 million dollars in leveraged Bitcoin short positions (sell them) were liquidated on Wednesday and Thursday. data. The rally over $120,000 was a surprise to the markets, and this reduces the risk of heavy profits being taken 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. After US restrictions were imposed on the export of advanced AI chip to China as well as Meta’s decision not to hire in their AI division, there was increased scrutiny for the artificial intelligence industry.

Bitcoin’s rise to $125,000 or higher is becoming more plausible as investors show greater confidence in future interest rate reductions in the US. They also perceive less risk in a market correction. The steady growth of gold highlights the growing interest among traders in alternatives to traditional bonds and equity markets.

The information contained in this article is meant to provide general knowledge and not as legal or financial advice. These are solely the opinions, views, and thoughts of the author and may not reflect the opinions and views of Cointelegraph.