Bitcoin Rally Up to $125k Possible? Here’s 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.

BitcoinBTC() flirted at the 121,000 level Thursday, its highest in seven 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 an environment for a possible short squeeze.

Bitcoin’s record-breaking price was reached in mid-August after gold has been stuck at $3,400 since the middle of August. The global trade tensions at that time were intensifying, as the United States’ temporary 90-day tariff cut on China imports expired on Aug. 12. Expectations of looming inflationary forces fuelled the expectation.

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 a major concern by traders, they gained more confidence in the US Federal Reserve’s (Fed).

Import tariffs did not negatively impact the US retail sales or trade balance in August, which disappointed traders who purchased Bitcoins above that amount. 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 said that the US President Donald Trump’s policies on trade, immigration, etc. were to blame for this pressure. according Reuters. He said that the effects of these changes are also reflected in his comments. “will further show in coming months,” Traders are encouraged to seek out alternative hedge instruments.

Sell pressure is reduced by the Bitcoin derivatives market and a reduction in AI concerns

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. 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. 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 another factor easing 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 rise to $125,000 or higher is becoming more plausible as investors show greater confidence in interest rate reductions in the US. They also perceive less risk in a correction of the stock market. Gold’s constant momentum points to traders’ preference for alternative markets than traditional equity and bond markets.

The article does not provide legal advice or investment recommendations and it is intended for informational purposes only. These are solely the opinions, views, and thoughts of the author and may not reflect the opinions and views of Cointelegraph.