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 surge highlights the search for alternative investments as expectations of interest rate cuts gain momentum.

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 indicate that traders have been caught by surprise, which often leads to a 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 intensifying, as the United States’ temporary 90-day tariff cut on China imports expired on August 12, increasing expectations about 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.

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 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, 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. 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.

Reduced concerns about AI and Bitcoin derivatives reduce sell-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. 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 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 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 reductions coming in the US. Gold’s constant momentum is a sign of traders’ preference for alternative markets to the traditional equity and bond markets.

The information contained in this article is meant to provide general knowledge and not as legal or financial advice. This article is solely for informational purposes. It does not represent or reflect Cointelegraph’s views.