Bitcoin Forecast: Expert Reveals 4 Reasons To Be Bullish On Q4
August 29 2024 - 11:30AM
NEWSBTC
In his latest market analysis titled “Sugar High”, BitMEX founder
Arthur Hayes lists four reasons to be bullish on Bitcoin and the
broader crypto market in the final quarter of 2024. Hayes opens his
analysis with a metaphorical comparison of his skiing diet to the
fiscal approaches of major central banks. He likens quick energy
snacks to short-term monetary policy adjustments, particularly the
interest rate cuts by the US Federal Reserve, the Bank of England,
and the European Central Bank. These cuts, he argues, are like
“sugar highs”—they boost asset prices temporarily but must be
balanced with more sustainable financial policies, akin to “real
food” in his analogy. This pivotal monetary policy shift after
Federal Reserve Chairman Jerome Powell’s announcement at the
Jackson Hole symposium, triggered a positive reaction in the
market, aligning with Hayes’s prediction. He suggests that the
anticipation of lower rates makes assets priced in fiat currencies
with fixed supplies, such as Bitcoin, more attractive, hence
boosting their value. He explains, “Investors believe that if money
is cheaper, assets priced in fiat dollars of fixed supply should
rise. I agree.” However, Hayes cautions about the potential risks
of a yen carry trade unwind, which could disrupt the markets. He
explains that the anticipated future rate cuts by the Fed, BOE, and
ECB could reduce the interest rate differential between these
currencies and the yen, posing a risk of destabilizing financial
markets. Hayes argues that unless real economic measures, akin to
his “real food” during ski touring, are taken by central
banks—specifically expanding their balance sheets and engaging in
quantitative easing—there could be negative repercussions for the
market. “If the dollar-yen smashes through 140 on the downside in
short order, I don’t believe they will hesitate to provide the
“real food” that the filthy fiat financial markets require to
exist,” he adds. Related Reading: Bitcoin Plummets To $59,000,
On-Chain Data Reveals Why To further solidify his argument, Hayes
references the US economy’s resilience. He notes that the US has
only experienced two quarters of negative real GDP growth since the
onset of the COVID-19 pandemic, which he argues is not indicative
of an economy that requires further rate cuts. “Even the most
recent estimation of 3Q2024 real GDP is a solid +2.0%. Again, this
is not an economy suffering from overly restrictive interest
rates,” Hayes argues. 4 Reasons To Be Bullish On Bitcoin In Q4 This
assertion challenges the Fed’s current trajectory towards lowering
rates, suggesting that it might be more politically motivated
rather than based on economic necessity. In light of this, Hayes
presents four key reasons to bullish on Bitcoin and the broader
crypto market in Q4. 1. Global Central Bank Policies: Hayes
highlights the current trend of major central banks, which are
cutting rates to stimulate their economies despite ongoing
inflation and growth. “Central banks globally, now led by the Fed,
are reducing the price of money. The Fed is cutting rates while
inflation is above their target, and the US economy continues to
grow. The BOE and ECB will likely continue cutting rates at their
upcoming meetings,” Hayes writes. Related Reading: Buying Bitcoin
Now Is Like Getting It Below $10,000 In 2019: Experts 2. Increased
Dollar Liquidity: The US Treasury, under Secretary Janet Yellen, is
set to inject significant liquidity into the financial markets
through the issuance of $271 billion in Treasury bills and an
additional $30 billion in buybacks. This increase in dollar
liquidity, totaling around $301 billion by year-end, is expected to
keep financial markets buoyant and could lead to increased flows
into Bitcoin and crypto as investors seek higher returns. 3.
Strategic Treasury General Account Usage: Approximately $740
billion remains in the US Treasury General Account (TGA), which
Hayes suggests will be strategically deployed to support market
conditions favorable for the current administration. This
substantial financial maneuvering capability could further enhance
market liquidity, indirectly benefiting assets like Bitcoin that
thrive in environments of high liquidity. 4. Bank Of Japan’s
Cautious Approach To Interest Rates: The BOJ’s recent apprehensive
stance towards raising interest rates, particularly after observing
the impact of a minor rate hike on July 31, 2024, signals a
cautious approach that will consider market reactions closely. This
cautiousness, intended to avoid destabilizing markets, suggests a
global environment where central banks might prioritize market
stability over tightening, which again bodes well for Bitcoin and
crypto. Hayes concludes that the combination of these factors
creates a fertile ground for Bitcoin’s growth. As central banks
globally lean towards policies that increase liquidity and reduce
the attractiveness of holding fiat currencies, Bitcoin stands out
as a finite supply asset that could potentially skyrocket in value.
“Some fear that the Fed cutting rates is a leading indicator of a
US and, by extension, developed market recession. That might be
true, but […] they will ramp up the money printer and dramatically
increase the money supply. That leads to inflation, which could be
bad for certain types of businesses. But for assets in finite
supply like Bitcoin, it will provide a trip at lightspeed 2 Da
Moon! Hayes states. At press time, BTC traded at $60,094. Featured
image created with DALL.E, chart from TradingView.com
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