Blockbuster US economic growth and improving macroeconomic conditions will propel Bitcoin’s price upward from its current level of $70,000, analysts say.
The Federal Reserve’s buying up of treasury bills to inject more money into the financial system — thus helping asset prices — has been a key catalyst to the bounce, analysts David Brickell and Chris Mills of the London Crypto Club said on Sunday.
“We therefore remain bullish on both equities and crypto over the coming months with a still supportive macro backdrop characterised by robust US growth alongside renewed disinflation and an improving US liquidity pulse,” they said.
In December, the Fed began buying Treasury bills again to ensure sufficient liquidity in the financial system and to control interest rates.
The bullish call comes after Bitcoin’s price jumped 12% over the weekend, amid $245 million in short positions liquidated.
It had briefly dipped to as low as $60,000 on Friday.
To be sure, the top crypto is still down over 44% from its all-time high of $126,000, while other asset classes, such as stocks and gold, are inching back toward their record highs.
Investors have been steadily dumping their spot Bitcoin exchange-traded funds, to the tune of $6.5 billion since November, DefiLlama shows
Meanwhile, the S&P 500, a key barometer of the broader asset market, continues to push higher.
That’s despite fears of an artificial intelligence bubble, a broad tech selloff, and political chaos.
“Equities and gold have proved more resilient due to positioning and flows,” Brickell and Mills wrote.
“Equity investors were under-exposed after the April drawdown and were forced to chase performance into year-end, while gold continues to benefit from sustained central bank demand as part of a broader ‘de-dollarisation’ move amid increasing weaponisation of the dollar,” they said.
Fed to ease
President Donald Trump’s nomination of hawk Kevin Warsh as Fed chair dragged crypto prices down, but financial expansion is still inevitable, Brickell and Mills said.
That means they expect the Fed to inject more money into the financial system, which would push up asset prices like Bitcoin.
“In practice, balance sheet expansion is often a necessity rather than a choice when funding markets come under strain — as evidenced by the recent resumption of T-bill purchases,” they said.
“Any push toward a smaller Fed balance sheet is likely to be offset by regulatory changes that shift liquidity provision to private balance sheets rather than drain it from the system.”
Crypto market movers
Bitcoin is up 0.5% over the past 24 hours, trading at $69,697.
Ethereum is down 3% over the past 24 hours, trading at $2,042.
