Bitcoin (BTC) has risen 5.4% over the past seven days following the U.S. Federal Reserve's (Fed) 50 basis point interest rate cut, but industry analysts remain divided on which direction Bitcoin will take in the coming weeks of the fourth quarter.
Tom Dunleavy, a partner at MV Global, believes the current macroeconomic climate is the “perfect situation” for risk assets such as cryptocurrencies, noting that most signals from the U.S. economy are neutral to expansionary, the opposite of a recession.
Bullish emotions
Dunleavy also emphasized that the market is already pricing in a 250 basis point cut in U.S. interest rates, adding that this bold rate cut, combined with expected 18% earnings growth over the next 12 months, is “something we've never seen before.”
Meanwhile, Matthew Siegel, head of digital assets at VanEck, said that the U.S. Congress’ recent stopgap spending bill, which proposes to keep the federal government running through the fourth quarter, should be “bullish” for Bitcoin as it directly translates to “a lack of meaningful fiscal reform” over the next three months.
He added that if the bill becomes law, it could reduce “downside risks.”
Meanwhile, Ryan Lee, lead analyst at Bitget Research, said the improving macro environment, continued accumulation by MicroStrategy, and a recovery in inflows into spot Bitcoin exchange-traded funds (ETFs) were bullish signs.
However, he also warned that the Fed's rate cuts could increase market volatility and send prices back to the $58,000 level if the macroeconomic picture weakens.
Careful evaluation
However, some industry observers believe that Bitcoin will remain weak for the next few weeks as it has been trading in a downtrend since March.
Some analysts maintain a more conservative view and believe that in this period of risk and uncertainty, prices are likely to be influenced by upcoming macroeconomic events.
Strong data from the U.S. economy points to resilient growth, which is fueling the current rally in risk assets, Aurélie Baselet, principal analyst at Nansen, said in a Sept. 23 report.
But there's still room for further declines, said Berser, who attributed the vulnerability to the high cost of U.S. stocks, which trade at more than 20 times forward earnings (P/E) – the relationship between a stock's current price and its expected earnings per share.
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