Can Bitcoin Reach $70,000 if the Fed Cuts Interest Rates?
According to BitMEX co-founder Arthur Hayes, if the U.S. Federal Reserve decides to cut interest rates, it will cause Bitcoin to quickly rally towards $70,000. Hayes had previously predicted that Bitcoin would rise to this level after March, but the Fed has raised interest rates three times since then. Fed Chair Jerome Powell stated that their next decision will depend on inflation and jobs data.
The Fed’s Monetary Policy and Bitcoin’s Potential
Macroeconomic analysts are trying to predict when the Fed will stop raising interest rates or change its course, especially after the bank collapse in March. Additionally, the Fed’s balance sheet has decreased due to the debt ceiling crisis. However, it is likely that the Fed is done with rate hikes as the job market cools and the unemployment rate increases. Traders are eagerly awaiting CPI and PPI data to confirm the market direction.
Why Bitcoin Didn’t Reach $70,000 Earlier
Hayes believes that the reason Bitcoin did not reach $70,000 after March is because people focused too much on nominal Fed rates without considering the high nominal GDP growth in the U.S. According to Hayes, the Fed’s only option was to cut rates in order to restore the health of the banking system, which would lead to a quick march towards $70,000 for Bitcoin.
The Relationship Between Bitcoin and the Fed
During a keynote at the Korea Blockchain Week conference, Hayes confirmed that Bitcoin has a positive relationship with Fed policy and other macro factors. Currently, Bitcoin is indicating an upcoming rally as real rates (US 2Yr Treasury Yields minus nominal GDP growth) are turning positive. Bitcoin’s price is currently at $26,123, up 2% in the last 24 hours, with increased trading volume.
Hot Take: Bitcoin’s Potential Growth Amidst Fed’s Decision
Arthur Hayes believes that if the U.S. Federal Reserve cuts interest rates, Bitcoin has the potential to rally towards $70,000. The Fed’s monetary policy and its impact on the economy play a significant role in Bitcoin’s performance. Hayes argues that people should consider the high nominal GDP growth in the U.S. alongside nominal Fed rates when predicting Bitcoin’s price. As real rates start to turn positive, Bitcoin is indicating an upcoming rally. Currently, Bitcoin’s price is at $26,123, showing a 2% increase in the last 24 hours.
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