News
Several Tailwinds Could Push Bitcoin To $100,000 This Year As U.S. Inflation Cools
The recent cryptocurrency market correction presents an opportunity for long-term investors, with tailwinds likely to push Bitcoin to $100,000 by the end of the year.
That’s according to Matt Hougan, chief investment officer at cryptocurrency manager Bitwise, who outlined his reasoning in a recent investor note. Note Wednesday, a day before official U.S. inflation data showed a decline in June.
Inflows to US spots Bitcoin Exchange-traded funds, post-halving supply shortages, the possible launch of Ethereum spot ETFs, U.S. Federal Reserve rate cuts and a shifting political landscape in Washington could offer a respite from falling cryptocurrency prices, he said.
“The cryptocurrency market is in a strange dynamic right now,” Hougan said. “All the short-term news is bad and all the long-term news is good. That dichotomy is creating an incredible potential opportunity for long-term investors.”
The U.S. Bureau of Labor Statistics says reported The consumer price index (CPI) fell 0.1% in June on Thursday, following a flat performance in May. This marked the first decline in the index since May 2020.
“Tonight’s Consumer Price Index (CPI) release caught everyone’s attention,” QCP Capital wrote in a brief Note Thursday. “This optimism has been reflected in the continued rally in stocks, but has yet to be priced into the cryptocurrency market.”
Cooling inflation could strengthen the Fed’s resolve to start cutting rates this year, benefiting risky assets like Bitcoin.
This could happen as early as September, with traders predicting an 84.6% chance of this happening, according to CME FedWatch Tool.
The timing could prove propitious for investors, as Bitcoin’s supply continues to shrink after the halving, forcing miners to give up as the difficulty of extracting resources increases.
While a glut from Mt. Gox creditors and German Bitcoin sell-offs weighs on investor sentiment, it is unlikely to translate into much in the way of ETF demand, Decipher previously reported.
Since their launch in January, spot bitcoin ETFs have raised about $15 billion in net new assets, but have yet to be approved for use by major asset management platforms, including Morgan Stanley and Wells Fargo.
“When that happens, I think later this year, we will probably see billions of dollars more inflow,” Hougan said.