Bitcoin traders may be hopeful about what lies ahead. However, looking at the daily chart, the world’s most valuable coin is struggling for momentum. BTC prices are trading in a tight range, with support around $56,000 on the lower end and a bullish liquidation level at $63,000.
Even though the uptrend continues, at least based on the price action over the past few trading days, conservative and risk-on investors have taken a back seat.
Only when there is a clear trend definition, below $50,000 or above $72,000, can traders commit. The result will be an augment in trading volume, currently muted and well below the averages seen on August 8.
Is Bitcoin Getting Ready for a 5x Enhance?
While there is some caution, one analyst in his post on X: thinks Bitcoin could be poised for a significant rally in the coming sessions. Interestingly, the confident trader compares the current state of affairs to the events of 2020, when the global economy came to a standstill due to the COVID-19 pandemic.
Governments have had to intervene by imposing lockdowns and cutting interest rates, which in the United States and around the world have fallen to their lowest levels in many years.
The analyst says that at spot rates, Bitcoin is right where it was in September 2020. While prices fluctuated briefly, it only took five low months for prices to rise from $10,500 to over $56,000.
Even if history doesn’t repeat itself like it did in 2020, it may rhyme. That’s why there’s nothing, given current market conditions, that could stop prices from rising, even 5x.
Interest rate cuts and politics as key drivers
Throughout 2020, the US Federal Reserve cut interest rates, meaning that accommodative monetary policy forced capital into Bitcoin, pushing prices to almost $70,000 in November 2021. Falling interest rates were a key factor driving demand for BTC.
Analysts expect the central bank to ease policy in September, now that inflation continues to fall toward the 2% benchmark in the United States. That, in turn, creates a very favorable environment for safe-haven assets, primarily Bitcoin.
Furthermore, as politicians shift their stance on cryptocurrencies to support the technology, the outcome of the November 2024 election will likely have huge implications for the industry.
Kamala Harris and Donald Trump have both expressed plans to support crypto assets. However, Trump was the more aggressive of the two, saying his administration would even consider adding Bitcoin as a strategic asset, similar to gold.
Featured image from Pexels, chart from TradingView
