Bitcoin (BTC) surged above $66,000 on Friday after the release of a softer-than-expected US Core PCE inflation report for August. The news sparked optimism that the Federal Reserve may ease interest rates sooner, potentially steering the US economy away from a recession in 2025. This marks Bitcoin’s highest price level in almost two months.
Softer Inflation Data Boosts Bitcoin Price
The headline PCE price index revealed that US prices grew by 2.2% year-on-year, down from July’s 2.5% and below the anticipated 2.3%. On a month-over-month basis, the index rose by 0.1%, meeting economists’ expectations. The Core PCE price index, which excludes food and energy, increased by 2.7% year-on-year, as predicted, while the monthly rise of 0.1% was slightly lower than forecasts.
https://twitter.com/CyclesWithBach/status/1839643811749781723
This minor inflation miss has led to increased expectations of a 50 basis point (bps) interest rate cut at the Federal Reserve’s upcoming November meeting. According to the CME Fed Watch Tool, money markets are now pricing a 53.4% probability of this rate cut, up from 49.3% the day before.
Impact of Fed Expectations and Recession Fears on Bitcoin
The anticipation of aggressive monetary easing by the Fed, coupled with diminishing recession fears, has been a significant driver for Bitcoin’s recent price surge. Currently, Bitcoin has risen over 25% from its early September low of around $52,500 and is on track to end September with a 12% gain. Historically, September has been one of Bitcoin’s weakest months, making this performance particularly notable.
Looking ahead, October typically brings stronger momentum for Bitcoin, with Q4 historically being a bullish period.
The average #Bitcoin cycle:
Starts 170 days after halving
Peaks 480 days after halvingWe are currently 155 days after the $BTC halving pic.twitter.com/hq5MY2eDAV
— Quinten | 048.eth (@QuintenFrancois) September 22, 2024
Where Is Bitcoin Heading Next?
Several indicators point toward further price increases for Bitcoin in the upcoming quarter. Seasonal factors, along with expectations of a global central bank easing cycle, suggest the potential for continued gains. Additionally, the upcoming US Presidential election in November could play a pivotal role in influencing market sentiment.
Both candidates, former President Donald Trump and Vice President Kamala Harris, have recently shown support for cryptocurrencies. While a Trump victory may accelerate the crypto rally, Harris is also seen as a favorable figure for the crypto market.
Moreover, Bitcoin’s historical post-halving patterns are likely to contribute to future price movements. Bitcoin rallies often intensify around 170 days after the halving event, with market peaks typically occurring 480 days later. Although the current rally, driven by strong demand for Bitcoin ETFs, may not mirror the intensity of past cycles, the outlook for Bitcoin remains bullish.
ETF Demand and Price Targets
Institutional interest in Bitcoin, particularly through ETFs, has surged in recent sessions and is expected to continue growing in the coming weeks. Analysts predict that this trend will drive further attention to Bitcoin, with bulls eyeing key resistance levels.
The first major target is a retest of the $70,000 level, followed by a potential challenge to the all-time high near $74,000. If Bitcoin continues its historical bullish trend in October, new record highs could be within reach. Some analysts are even speculating that Bitcoin might aim for the $100,000 mark in the near future.
JUST IN: #Bitcoin ETFs had $365m inflows yesterday.
The biggest in more than 2 months! pic.twitter.com/i9OdNXbV5q
— DAZ (@Razzledazzle737) September 27, 2024
With a combination of easing inflation, supportive Federal Reserve actions, significant political developments, and favorable historical patterns, Bitcoin appears poised for further gains as we move into the final quarter of the year.
