A bearish narrative
There’s a prevailing bearish narrative in the media and on social media platforms. During the recent FOMC meeting, U.S. Federal Reserve Chairman Jerome Powell hinted at another rate hike this year, with further rate cuts expected in the future.
In addition, the price of oil is rising as Russia and Saudi Arabia reduce production, and the conflict in Ukraine persists. Stock markets are also declining, with the S&P 500 and Nasdaq making lower highs, while only a few large companies like Amazon, Google, and Microsoft are keeping U.S. stocks afloat.
Furthermore, due to its perceived stability amidst potential market turmoil, the U.S. dollar is gaining strength. The Dollar Index (DXY) is close to reaching a higher high if it can break through resistance at 105.7.
Bitcoin holding but …
Despite all the negative news, Bitcoin has managed to hold above $26,000 for the past six weeks. It remains within the downward channel that it has been following since September of last year.
For six weeks, Bitcoin has stayed below its 200-week moving average, increasing the likelihood of a downward breakout from the channel rather than an upward one.
However, considering these factors, Bitcoin could potentially reach the top of the channel at around $33,600. If there is enough upward price movement before the end of September, it may avoid a cross down on the monthly Stochastic RSI.
A contrarian view
Raoul Pal, investment strategist and co-founder of Real Vision, holds a contrarian view on the market. He believes that liquidity is crucial and that central banks are following a 4-year interest rate cycle. Pal predicts that central banks will ease and lower rates next year, which will drive Bitcoin’s bull run.
According to Pal, the best assets to hold during this cycle will be cryptocurrencies and tech stocks. Either Bitcoin will suffer if global economies enter a recession, or Pal’s theory will prove correct, and Bitcoin will lead other assets to higher prices.
Hot Take: Liquidity and Interest Rates: A Catalyst for Bitcoin’s Future
The current market conditions and narratives surrounding interest rates, oil prices, stock markets, and the U.S. dollar suggest a challenging environment for Bitcoin. However, there are potential catalysts that could drive its price upward.
Raoul Pal’s contrarian view emphasizes the importance of liquidity and predicts a new interest rate cycle that favors Bitcoin’s growth. If central banks ease monetary policies and cut rates next year, it could fuel a bull run for the cryptocurrency.
While uncertainty remains, it’s crucial to monitor these factors closely as they could significantly impact Bitcoin’s future trajectory.
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