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

Takeaways from the conference:

• More than $313 Million in Bitcoin Bearish Positions were Liquidated, Signaling Conditions for Short Squeeze.

• Gold’s growth highlights investors’ desire for alternatives, as the expectation of lower interest rates gains traction.

BitcoinBTCOn Thursday it flirted near the $121,000 mark, which was its highest level in 7 weeks. 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 conditions often for a market short squeeze.

Bitcoin reached a record high in August, after nearly two months of gold stagnating near $3400. The global trade tensions at that time were intensifying, as the United States’ temporary 90-day tariff cut on China imports expired on August 12, fueling fears of an inflationary threat.

Bitcoin returns 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 urgent 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 Bitcoin above $120,000 during August were disappointed. At least for the near term, import tariffs didn’t negatively impact US retail sales and the trade balance. Bitcoin’s advance in October has been accompanied by a 16% rise in gold over the past six weeks. data Points to the steady accumulation of central banks.

CME FedWatch indicates that implied probabilities of the US Federal Reserve cutting rates below 3.50% by 2024 are now at 40%. In mid-August, they were only 18%. 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. 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 sell-pressure

According to data from derivatives, in the days before Bitcoin reached its all-time peak at mid-August traders priced roughly equal odds for upwards and downwards price movements. However, today, the BTC options indicators signals a moderate level of fear about corrections, as put (sell), options trade at a higher price than call (buy).

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 heavy profits being taken in the futures market if the bullish momentum continues.

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OpenAI’s successful sale of shares at a valuation record of $500 billion was a factor which eased the short-term risks. After US export restrictions for advanced AI chip to China as well as Meta’s decision of freezing hiring, the artificial intelligence sector was facing increased scrutiny.

Bitcoin’s trajectory to $125,000 is more likely now that investors are increasingly confident about interest rate cuts coming in the US. They also perceive less of a risk for a market correction. The steady growth of gold highlights the growing interest among traders in alternatives to traditional bonds and equity markets.

This is not intended 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.