Bitcoin (BTC) should regain $64,000 “very quickly” as the United States Federal Reserve lowers interest rates.
In its latest monthly update report on Sept. 17, quantitative Bitcoin and digital asset fund Capriole Investments said that BTC price action was at a key crossroads.
Capriole founder “would not be surprised” at $64K BTC price
Bitcoin stands to benefit exponentially from macroeconomic shifts into Q4, itself the market’s best quarter, Capriole Investments founder Charles Edwards says.
While barely moving in the past month, BTC/USD is now primed to resume classic bull market moves should the Fed drop interest rates at its Sept. 18 meeting.
“This marks the start of a new dovish Fed policy regime, the first significant change since late 2021, when the Fed notified of their hawkish regime shift and which saw rates rise from 0 to 5.5% in 18 short months,” the report stated.
“This Hawkish regime also coincided with Bitcoin’s collapse from $60K to $15K. We are now at the start of the exact opposite regime.”
Barring any “bearish surprises” from the Fed, BTC/USD thus has $64,000 in its sights, having preserved weekly support, as shown by data from Cointelegraph Markets Pro and TradingView.
“While ugly, and still in a trend of lower highs and lower lows (net “bearish”), weekly support is responding well at $58K today. A weekly close above $64K would end the 7 month sequence of lower highs and likely see us travel back to range high ($70K) with haste, and probably beyond. Nonetheless, the Technicals picture is mixed at best, and bearish at worst, until the range (and monthly resistance at $60K) is reclaimed,” Edwards continued.
“Based on the current response to the Weekly $58K level, and given the major Fed event tomorrow, I would not be surprised to see that level taken very quickly to the upside, provided no bearish surprises from Chairman Powell tomorrow.”
BTC/USD 1-week chart. Source: TradingView
Bitcoin onchain supply data too bearish
The report cast aside concerns over shifting BTC supply trends, arguing that new phenomena such as the US spot Bitcoin exchange-traded funds (ETFs) had skewed perspectives.
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“2024 has seen massive capital re-distribution as a result of the ETF launch and Mt Gox. This capital movement has mischaracterized many on-chain metrics and told us a false narrative,” Edwards argued.
Going further still, the findings suggested that data covering supply ownership by time spent dormant — metrics which give rise to the popular “long-term holder” and “short-term holder” cohorts — are unreliable in 2024.
“In short, the last 6 months has seen on-chain metrics be massively ‘manipulated’ by huge supply re-classification, which on net did not see any significant organic long-term holder selling. This resulted in many on-chain metrics seeing extremely bearish readings comparable with prior cycle tops, as we discussed 2 months ago in Update 52,” the report read.
“This means that any on-chain metrics with ‘long-term holder’ data, or ‘supply last active more than XX months/years’ cannot be trusted in 2024. Yet these classifications form the basis of a significant portion of valuable on-chain metrics.”
BTC supply data (screenshot). Source: Capriole Investments
Edwards instead sees a bullish mid-term picture for BTC/USD.
“With Bitcoin trading within 2% of our last update, our view from Issue 53 that we are at a major pivot point remains,” he concluded.
He referenced the timing around Fed policy easing — Q4 is traditionally when Bitcoin puts in some of its best performance, while BTC/USD is also due to end its standard post-halving consolidation period.
“What lies ahead? Seasonally we have the best two quarters just 2 weeks away from us, which are also within the best 12-18 month window to be allocated to Bitcoin every 4 years, and at the start of a dovish Fed multi-year regime which will see growing liquidity injected into risk assets,” he wrote.
“We also have Gold paving consistent new all time highs since its break out a few months ago. You couldn’t ask for more favorable conditions for Bitcoin.”
BTC/USD quarterly returns (screenshot). Source: Capriole Investments
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.