Bitcoin, the leading cryptocurrency, is fluctuating within a narrow range of $80,000-$84,000, with the anticipated major surge failing to materialize. In its latest report, CoinShares analyzed the factors limiting the rise in BTC.
According to CoinShares, Bitcoin is showing resilience to declines thanks to a recovery in spot buying and an improvement in market sentiment, while high inflation and interest rate hike expectations in the US are limiting the upside potential in the cryptocurrency market.
Spot Buying Supports Bitcoin, Suppresses Inflation and Interest Rates!
According to CoinShares’ latest assessment, Bitcoin is exhibiting a relatively strong performance despite volatility in risky assets. The recovery in spot market buying, improved sentiment in equity markets, and the closing of short positions are among the key factors supporting the Bitcoin price.
In contrast, inflation data released in the US continues to be a significant risk for the cryptocurrency market. The consumer price index (CPI) exceeded expectations in September, raising concerns about inflation and interest rates.
Higher-than-expected inflation is also making it more difficult for the Fed to ease monetary policy and is reducing expectations of interest rate cuts. The possibility of interest rates remaining high for a longer period or a new increase could increase pressure on non-yielding assets like Bitcoin.
At this point, the market is also closely watching the possibility of another interest rate hike in December. The probability of rates remaining unchanged in October is priced at 90.6%, while the probability of an interest rate hike in December is priced at 68.8%.
Uncertainty Continues for Bitcoin!
CoinShares concludes its assessment by stating that in the short term, spot demand, as well as inflation, interest rate expectations, and liquidity conditions, could be decisive factors in Bitcoin’s trajectory. While spot purchases support the price, concerns about tight monetary policy pose an obstacle to a sustained rise.
Therefore, the direction of Bitcoin is expected to be shaped by upcoming economic data and policy signals from the Fed.
*This is not investment advice.
Continue Reading: There’s Hope for a Bitcoin Rise, But Two Obstacles Ahead! CoinShares Explains!