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

The key takeaways

• 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 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 held steady at $3,400. 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.

Bitcoins benefit from reduced inflation and increased gold prices

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.

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 advance in October has been accompanied by a 16% rise in gold over the past 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 at least 3.50% in January 2024 is now 40%. This was 18% 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, 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. 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 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. Currently, this same BTC indicator indicates a moderate fear for corrections, as put (sell), and call (buy), options trade at premiums.

CoinGlass reported that more than 313 million dollars in leveraged Bitcoin short (sell futures) positions have been liquidated from Wednesday to 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.

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 another factor 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 trajectory to $125,000 is more likely now that investors are increasingly confident about interest rate cuts coming in the US. Gold’s constant momentum highlights the growing interest among traders in alternatives to traditional equity and bond 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.