bitcoin traders may be optimistic about what lies ahead. However, looking at the daily chart, the world’s most valuable coin is struggling to gain momentum. btc prices are within a tight range, with support at around $56,000 at the lower end and a persistent sell-off level at $63,000.
Although the uptrend remains, at least considering the state of price action over the past few trading days, conservative and risk-accepting traders are now staying on the sidelines.
Traders can only engage when there is a clear trend definition, either below $50,000 or above $72,000. The result will be a pick-up in trading volume, which is currently moderate and well below the averages recorded on August 8.
Is bitcoin preparing for a 5x surge?
While there is caution, one analyst, in a post on x, x.com/OnChainCollege/status/1826628299868741981″ target=”_blank” rel=”noopener nofollow”>think bitcoin could be preparing for a major rally in the coming sessions. It is worth noting that the confident trader compares the current situation with the events of 2020, when the global economy came to a standstill due to the COVID-19 pandemic.
Governments had to intervene with lockdowns and interest rate cuts, which fell to multi-year lows in the United States and globally.
The analyst claims that at spot exchange rates, bitcoin is exactly where it was in September 2020. Although prices fluctuated temporarily, it only took five short months for prices to expand from $10,500 to over $56,000.
Even if history does not repeat itself as it did in 2020, it can rhyme. Therefore, there is nothing, given the current market conditions, that can prevent prices from rising, even from increasing fivefold.
Interest rate cuts and politics as key factors
During 2020, the US Federal Reserve cut rates, meaning that accommodative monetary policy forced capital into bitcoin, pushing prices to nearly $70,000 by November 2021. Falling interest rates were a key driver of btc demand.
Analysts expect the central bank to ease its policies in September as inflation continues to fall towards the benchmark 2% in the United States. This, in turn, creates a very favorable environment for safe haven assets, mainly bitcoin.
Furthermore, as politicians shift their stance on cryptocurrencies and support the technology, the outcome of the November 2024 election will likely have a huge influence on the industry.
Kamala Harris and Donald Trump have already expressed their plans to support crypto assets. However, Trump has been more aggressive than the two and has said that his administration would even consider adding bitcoin as a strategic asset, similar to gold.
Featured image from Pexels, chart from TradingView
