New Macro Forces Could Drive Bitcoin Higher
Bitcoin (BTC) could be poised for a boost in the coming weeks and beyond, thanks to new macro forces at play. According to popular trader Crypto Ed, changes to US macro policy are expected to pressure the US dollar while benefiting Bitcoin. Historically, Bitcoin and the dollar have exhibited an inverse correlation, and while this relationship has weakened recently, analysts believe that the current macro data and signals from the Federal Reserve could drive further upside in the crypto market next year.
Declining Inflation and Interest Rate Hikes
One of the key factors driving Bitcoin's potential rise is declining inflation, which could allow the Federal Reserve to pivot on interest rate hikes and increase liquidity in the market. This is seen as positive for risk assets, but negative for the US dollar. In fact, the US dollar index (DXY) has already declined more than 2% this week, reaching its lowest levels since mid-August.
Long-Term Outlook for the Dollar
Crypto Ed predicts further downside pressure on the US dollar, with a long-term outlook for the dollar index (DXY) at $92. This prediction aligns with other analysts who are optimistic about Bitcoin and expect new all-time highs for BTC/USD.
Market Repricing and Liquidity
Economist Lyn Alden points out that although today's dovish Fed and drop in the DXY may have kickstarted more liquidity in the market, global liquidity indicators have stalled recently. Alden notes that there has been a "pretty remarkable repricing" by the market in terms of forward rate expectations, suggesting that conditions for supporting a broad risk-asset renaissance may not be ideal just yet.
Bitcoin's Performance and Market Data
Despite recent volatility, Bitcoin is currently trading at $42,700 and has remained relatively flat. However, it is up 13% in December. It's important to note that this article does not provide investment advice, and readers should conduct their own research before making any decisions.
