Bitcoin (BTC) rose above $84,000 today, extending its upward momentum amid a wider rally of risky assets. The rally coincided with another positive day in US stocks, providing a positive background for cryptocurrency.
Despite bullish price action, some analysts remain cautious. LMAX Group strategist Joel Kruger warned that the S&P 500 monthly chart points to potential revisions to US stocks that could negatively affect cryptocurrency.
“Given the state of global trade tensions and concerns over the slowdown in the US economy, there is concern that stocks could fall even further when it becomes increasingly unclear how much accommodation the Fed can provide,” Kruger said.
Kruger also pointed out that with a wider revision in the market, Bitcoin could return to its March 2024 high of around $73,000-$74,000.
Investors have been watching this week’s Federal Open Market Committee (FOMC) meeting and are hoping the Fed will maintain interest rates at current levels. However, analysts are monitoring potential changes in central bank quantitative toning (QT) programs that could affect market liquidity.
David Duong, research director at Coinbase Institutional, suggested that the Fed could suspend or terminate the QT program as the bank reserve level approaches 10-11% of the GDP threshold, which is deemed necessary for financial stability.
Duon believes the recent crypto sales stemmed from macroeconomic concerns and worsening liquidity. However, he believes these terms will improve in the coming quarters and will provide some support for asset prices.
“Cryptocurrency prices were able to find a bottom in the coming weeks before reaching new highs later this year,” Duon said.
*This is not investment advice.
