2024 has so far been quite eventful for Bitcoin (BTC), whose price is currently hovering around $58,500, or up 40% year-to-date (YTD).
The most successful period for the primary cryptocurrency was in mid-March when it hit a new all-time high of over $73,500. In the following lines, we will explore some important factors that suggest a fresh peak might be observed before the end of the year.
The Fed’s Actions
The central bank of the United States – the Federal Reserve – adopted an aggressive anti-inflationary regime following the COVID-19 with a series of 11 consecutive interest rates hikes starting in early 2022 to set the benchmark at the current 5.25-5.50%.
A possible Fed pivot depends on economic data and the inflation rate. Previously, it was taught that the entity would wait until inflation cools off to the healthy zone of 2% before lowering interest rates. Not long ago, though, Chairman Powell said the bank may pivot earlier than expected:
“The implication of that is that if you wait until inflation gets all the way down to 2%, you’ve probably waited too long because the tightening that you’re doing, or the level of tightness that you have, is still having effects which will probably drive inflation below 2%.”
The potential lowering of interest rates in the US would align with similar actions from other central banks across the globe. Several weeks ago, the Bank of England (BoE) reduced the rates to 5%, marking the first cut since March 2020. The European Central Bank and the Bank of Canada also pivoted earlier this year.
The next FOMC meeting is scheduled for September 18 and it will be interesting to see whether the Fed will go ahead with such a move. The eventual lowering of the benchmark will make money borrowing cheaper, potentially increasing the interest in risk-on assets such as BTC.
The US Presidential Elections
Another element that could fuel a price rally for the leading digital asset is the outcome of the presidential elections in the States. The voting is scheduled for November with the Democratic nominee Kamala Harris and the Republican Donald Trump being the main contenders.
According to some industry participants, Trump’s possible triumph could be interpreted as good news for BTC bulls, considering his pro-crypto stance recently.
He recently presented himself as the right choice for those in favor of the cryptocurrency industry, promising to let the sector thrive. He also pledged to increase America’s BTC mining efforts and opposed the idea of launching a central bank digital currency (CBDC).
During the Bitcoin conference in Nashville, held at the end of July, Trump expressed his desire for the United States to become the global leader in cryptocurrency and to establish a national strategic reserve of BTC.
Over the weekend, Trump and Harris were estimated to have equal chances of emerging victorious in November. Currently, the Democratic candidate appears to have the upper hand, with 51% versus 47% for her main opponent.
The Halving
The Bitcoin halving, which took place on April 20, is also worth observing. The event occurs approximately every four years and slashes in half the daily issuance of the primary cryptocurrency.
Historically, it has been a precursor of a major rally for BTC and the entire market. Some experts recently reminded it usually takes a year (or even more) for the asset to peak after the event. X user Ali Martinez noted that Bitcoin reached its top around 530 days post-halving in the past two cycles. “If history repeats, we’re still in the early stages of this cycle,” he argued.
Rekt Capital envisioned a bull run in late September, claiming that BTC “tends to breakout into the Parabolic Phase of the cycle some ~160 days after the halving.”
Fear Territory
Last but not least, we will focus on the Fear and Greed Index, which gauges the current sentiment of investors based on various factors. It ranges from 0 to 100, with a ratio above 50 suggesting a state of “greed.”
In the past week, the metric has been in “fear” or “extreme fear” territory, which some investors and traders might view as a buying opportunity. After all, one of Warren Buffett’s investment advice says one should be greedy when others are fearful and vice versa.
