Is Bitcoin poised for a strong bull run? CaprioleInvestments predicts a return to $64,000

Is Bitcoin poised for a strong bull run? CaprioleInvestments predicts a return to $64,000CaprioleInvestments predicts that Bitcoin is primed to resume its strongest bull run due to a perfect storm of macroeconomic shifts and standard cyclical timing. As the Fed lowers rates, the price of Bitcoin is expected to return to $64,000 "very soon

Is Bitcoin poised for a strong bull run? CaprioleInvestments predicts a return to $64,000

CaprioleInvestments predicts that Bitcoin is primed to resume its strongest bull run due to a perfect storm of macroeconomic shifts and standard cyclical timing. As the Fed lowers rates, the price of Bitcoin is expected to return to $64,000 "very soon."

In the latest monthly update report released on September 17, quantitative Bitcoin and digital asset fund CaprioleInvestments stated that the BTC price action is at a critical crossroads. The fund's founder, Charles Edwards, is "not surprised" by the Bitcoin price of $64,000.

Edwards said that the fourth quarter is typically the best performing period for the Bitcoin market, and this macroeconomic shift will be a major boon for Bitcoin. Although Bitcoin/USD has remained virtually flat in the past month, a classic bull run is anticipated to resume "very soon" if the Fed cuts rates at its meeting on September 18.

The report stated: This marks the beginning of a new dovish Fed regime, the first major change since late 2021. At that time, the Fed declared their hawkish regime shift and proceeded to hike rates from 0% to 5.5% in 18 months. This hawkish regime also coincided with Bitcoin's plunge from $60,000 to $15,000. We are now at the beginning of the complete opposite regime.

Unless there are any "bearish surprises" from the Fed, BTC/USD is on track to hit the $64,000 target. Data shows that Bitcoin's weekly support level has been solid, which would favor its continued rally.

Edwards continued: While the current Bitcoin price action remains in a trend of lower highs and lower lows (net bearish), weekly support has held well at $58,000. A weekly close above $64,000 would end the 7-month lower high sequence and potentially see us swiftly return to the range highs ($70,000) and beyond. Still, the technical picture is mixed at best, bearish at worst until the range (and the $60,000 monthly resistance) is reclaimed.

Based on the current reaction to the $58,000 level weekly, and considering the Feds major event tomorrow, I wouldnt be surprised to see that level quickly rise if Chairman Powell doesn't have an unexpected dose of pessimism tomorrow.

Bitcoin On-Chain Supply Data Overly Pessimistic

The report dismisses concerns over changing BTC supply dynamics, arguing that new developments like US spot Bitcoin exchange-traded funds (ETFs) are distorting perceptions.

Edwards believes: We've had a major capital reallocation occur in 2024 due to the introduction of ETFs and the MtGox release. This capital flow misrepresents many on-chain metrics, telling us a false narrative.

Furthermore, the findings indicate that supply ownership metrics based on dormancyleading to the popular long-term holder and short-term holder cohortsare unreliable in 2024.

The report states: To put it simply, on-chain metrics have been heavily manipulated by a large supply reclassification over the last 6 months with no clear organic long-term holder sell-off in net value. This has led to an extremely pessimistic read on many on-chain metrics, comparable to previous cycle tops, as we discussed in update 52 two months ago.

This means any on-chain metric that incorporates long-term holder data or supply active for XX months/years is unreliable in 2024. However, these classifications make up a significant portion of many valuable on-chain indices.

Instead, Edwards believes the medium-term outlook for BTC/USD is positive.

With Bitcoin trading volume within 2% of our last update, we remain of the view from our update 53 that we are at a major pivot, he concluded. He cited the timing of the Fed's accommodative policiestraditionally the fourth quarter is the strongest for Bitcoin and Bitcoin/USD is also coming to the end of its standard post-consolidation period.

Whats coming up? Seasonally, we have the next two weeks, which are the two best quarters, the best 12 to 18-month window allocated to Bitcoin every four years, and the Fed is beginning a multi-year dovish regime, injecting more and more liquidity into risk assets.

We also have gold laying down all-time highs since the breakout a few months ago. You couldnt ask for more favorable conditions for Bitcoin.

Impact of Interest Rate Cuts

A 25-basis-point (0.25%) or 50-basis-point (0.50%) interest rate cut is a common measure taken by central banks to adjust monetary policy. The main purpose of lowering interest rates is to stimulate economic growth by encouraging businesses and individuals to borrow and invest more by reducing the cost of borrowing. Here are the main differences and impacts of a 25-basis-point versus a 50-basis-point interest rate cut:

1. A 25-basis-point rate cut provides moderate stimulus: A 25-basis-point cut is considered a moderate monetary policy adjustment. It is suitable for situations where the economy is slowing down but has not yet fallen into a significant recession. By making a small interest rate cut, the central bank can avoid a sharp market reaction while still maintaining more policy tools for the future.

Market Reaction: The market may view this as a cautious optimistic signal from the central bank, suggesting that while the economy is slowing, it is not facing serious problems overall.

Impact on the Market:

• Stock Market: There may be a mild rise in the stock market, especially in sectors such as banking and real estate, which benefit from lower interest rates.

• Bond Market: Bond yields may fall, and bond prices may rise.

• Exchange Rates: The domestic currency may depreciate slightly against other currencies, as lower interest rates reduce investor demand for the domestic currency.

2. A 50-basis-point rate cut provides stronger stimulus: A 50-basis-point rate cut is a more significant move, usually taken when the economy is showing a marked slowdown or when inflation pressures are low. The central bank wants to quickly alleviate the economic downturn or support economic recovery by making a large interest rate cut.

Market Reaction: This more significant interest rate cut usually signals that the economy is facing greater risks. It may trigger market concerns about the economic outlook, even though the rate cut is meant to support the economy.

Impact on the Market:

• Stock Market: In the short term, it may boost the stock market, especially for industries that rely on borrowing, but the market may also be concerned about a worsening economic outlook.

• Bond Market: Bond yields will fall further, bond prices will rise, and investors will increase their demand for fixed-income assets.

• Exchange Rates: A larger rate cut could lead to a more significant depreciation of the domestic currency, as lower interest rates make the domestic currency less attractive.

Conclusion

A 25-basis-point rate cut: is more of a preventative or moderate stimulus measure, indicating a cautious stance by the central bank towards the economy.

A 50-basis-point rate cut: usually means that the economy is facing greater risks, and the central bank wants to quickly ease economic pressure through a stronger monetary easing policy.

The central bank's choice of whether to cut interest rates by 25 basis points or 50 basis points depends on current economic conditions, inflation pressures, and market expectations for a recession.