Bitcoin Should Hold $100K as Q3 Seasonality Predicts Sideways Trading

Bitcoin is struggling this week, likely influenced by uncertain monetary policies and a potential Fed rate cut in July. Historical data suggests Q3 typically shows little movement for Bitcoin. Analysts debate its risk asset status, with some downgrading its reputation as ‘digital gold’ as traders focus on short-term volatility.

Bitcoin seems to be stuck in a bit of a rut this week, but analysts think it could change if it mirrors shifts in the global money supply. Jurrien Timmer, Director of Global Macro at Fidelity, mentioned that geopolitical tensions have recently caused gold prices to rise, thanks in part to an 8.5% year-on-year increase in the global money supply. Unfortunately, Bitcoin, with its notoriously volatile nature, may not follow suit as smoothly as gold might.

Interestingly, there’s been a noticeable uptick in the Sharpe ratios for both gold and Bitcoin, suggesting some improvement in risk-adjusted returns. This metric hints at the potential for Bitcoin’s price recovery. Still, Bitcoin’s mixed identity—bouncing between being a store of value and a “Nasdaq proxy”—complicates its stability as an investment. Markets analyst Tony Sycamore had a similar sentiment, observing Bitcoin’s current pattern—that it behaves more like a risky asset akin to US equities rather than acting as a safe haven like gold.

Nick Ruck, of LVRG research, echoed these concerns, pointing out that Bitcoin’s “digital gold” narrative is losing its allure. Currently, most traders seem to be more fixated on short-term gains rather than viewing Bitcoin as a long-term, risk-adjusted investment. This shift in focus could impact Bitcoin’s price in upcoming months.

As we look at Bitcoin’s expected performance during Q3, history shines a light on what might be in store. The Federal Reserve is keeping rates stable between 4.25%-4.50%, a level that’s been unchanged since late 2024. This week’s sluggish trading for Bitcoin could be a direct response to the uncertainties in monetary policy and global disputes. However, Fed Governor Christopher Waller dropped a hint during a CNBC interview on Friday, mentioning a potential rate cut as early as July, which could breathe some life into Bitcoin prices.

If those cuts do happen, Bitcoin could see an uptick in the second half of this year, but past trends suggest that any real momentum may not kick in until Q4. Timothy Peterson, a network economist, noted that historically, Bitcoin’s average return from June 1 to September 30 has only been about 1%. Therefore, it’s likely Bitcoin will remain above the $100,000 mark for much of that time, setting the stage for stronger rallies later on.

Just last Friday, Bitcoin hit a significant setback after a liquidity surge that reached around $106,000 during the London trading session. The technicals indicate persistent bearish momentum, not boding well for short-term traders. Analysts are eyeing a possible liquidity sweep down to about $102,614 in the following days. Should the market pressure continue, a dip below the $100,000 support level could be on the horizon, aligning with previous lows and a critical gap in price movement.

It’s essential to note that this article doesn’t provide investment advice or recommendations. All trading and investing comes with its risks, and anyone looking to invest should thoroughly research their options and be fully aware of potential pitfalls.

In summary, analysts suggest that, despite Bitcoin’s current struggles, potential changes in the Federal Reserve’s interest rate policy could have a major impact. While there’s hope for a price recovery, historical trends indicate a rather stagnant Q3 with modest returns. Bitcoin may hang above the $100,000 mark for much of the summer, but traders might have to wait until Q4 for any significant upward movement. As always, caution is critical when navigating the volatile crypto waters.

Original Source: cointelegraph.com