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 the need for investors to find alternatives, as rate-cut expectations grow.

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 the perfect conditions for a market short squeeze.

Bitcoin’s record-breaking price was reached in mid-August after gold’s stagnation of nearly two months near $3400. 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, fueling fears 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. The traders were confident that, with inflation no longer being a major concern, the US Federal Reserve would continue to cut interest rates.

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 coincides with an 16% increase in gold prices within six weeks. data Points to 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, the Vice-Chairman of the US Federal Reserve, expressed concern about the state of labor on Monday. “could experience stress” if left unsupported. Jefferson blamed the US president Donald Trump for his trade, immigration and other policies. according Reuters. The effects of these changes were also noted by the Reuters reporter. “will further show in coming months,” Traders are encouraged to seek out alternative hedge instruments.

Reduced concerns about AI and Bitcoin derivatives reduces 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. Today however, this same BTC Options indicator indicates a moderate fear for 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. It is further confirmation that markets were caught off guard by the recent rally of the dollar above $120,000, which reduces the possibility of a large profit taking in futures markets.

Related: Bitcoin on TV: How shows like South Park influence crypto

OpenAI’s successful sale of shares at a valuation record of $500 billion was also a factor in easing the short-term risks. 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 rise to $125,000 or higher is becoming more plausible as investors show greater confidence in coming US interest rate reductions and perceive less risk from a correction in the stock market. The steady growth of gold highlights investors’ preference for alternative markets to the traditional bond and equity market.

The article does not provide legal advice or investment recommendations and it is intended for informational purposes only. This article is solely for informational purposes. It does not represent or reflect Cointelegraph’s views.