Bitcoin rallied past the $85,000 mark this week, buoyed by renewed investor optimism as the Federal Reserve announced incremental changes to its quantitative tightening (QT) policy. The cryptocurrency’s price climbed steadily following the Fed’s decision to slow the pace of balance sheet reduction, a move interpreted by markets as a potential shift toward less aggressive monetary tightening. Analysts highlight that this adjustment has reignited institutional interest in Bitcoin as a hedge against macroeconomic uncertainty.
The Fed’s revised strategy reduces the monthly cap on Treasury rolloffs from $60 billion to $25 billion while maintaining existing limits on mortgage-backed securities. Chair Jerome Powell emphasized the change aims to avoid unnecessary stress on financial markets, stating the central bank remains “data-dependent” amid evolving economic indicators. Futures markets now price in a 70% likelihood of rate cuts by September, further fueling risk-on sentiment across equities and digital assets.
Bitcoin’s resurgence follows a volatile month that saw it dip below $74,000 after geopolitical tensions disrupted global markets. Derivatives data reveals open interest in Bitcoin futures surged 18% this week, with institutional buyers accumulating positions through over-the-counter desks. Crypto exchange CoinGecko reported spot trading volumes spiking 34% compared to last week, while ETF inflows reached $2.8 billion month-to-date—the highest since January.
Market observers are divided on Bitcoin’s near-term trajectory. Standard Chartered analysts reiterated their $100,000 price target for 2024, citing ETF demand and halving-related supply constraints. However, JPMorgan strategists warned of potential near-term “overextension,” noting the cryptocurrency’s 14-day Relative Strength Index has hovered near overbought territory since mid-March. Regulatory developments remain a wild card, particularly regarding proposed legislation on stablecoins and mining energy disclosures.
For now, traders appear focused on liquidity trends. The Fed’s QT pivot has injected $1.2 trillion in excess reserves into the banking system since October 2023, creating what some call a “soft landing runway” for risk assets. With Bitcoin’s next halving event projected for April 20, miners are reportedly holding reserves at levels last seen during 2020’s bull run—a sign of confidence in prolonged upward momentum.
Sources:
https://www.coindesk.com
https://www.federalreserve.gov
https://www.coingecko.com
https://www.bloomberg.com/crypto
