May 22, 2024
Bitcoin's at $63,683, May Hit $100K if High-Yield Rate Drop Below 7%
Bitcoin price today

Bitcoin’s at $63,683, May Hit $100K if High Yield Rate Drop Below 7%

Wednesday, May 15, 2024: Bitcoin Price Today is $63,683. One key indicator is being highlighted by an analyst as crucial for predicting whether Bitcoin can surpass its previous all-time high of $73,700 later in 2024. “The U.S. high yield rate is a great indicator, and it needs to drop below 6 or 7% for a sustainable all-time high,” Timothy Peterson, founder and investment manager of Cane Island Alternative Advisors, emphasizes that the United States Federal Reserve’s actions, particularly interest rate movements, are pivotal.

Source: TradingView

According to Peterson, the trajectory of Bitcoin’s price is significantly influenced by the Federal Reserve’s decisions on interest rates, making this the primary measure to watch.

The Importance of the U.S. High Yield Rate

Timothy Peterson explains that the U.S. high yield rate, currently at 7.54% according to YCharts data, needs to drop below 6 or 7% for Bitcoin to achieve a sustainable all-time high. He predicts that if this happens, Bitcoin could potentially reach $100,000 by the fourth quarter of 2024, or by the second quarter of 2025 at the latest. The Federal Reserve lowering interest rates typically leads to a corresponding drop in high-yield rates, an expectation shared by nearly two-thirds of economists surveyed by Reuters, who predict such a move in September. This reduction in high-yield rates would make traditional investments less attractive, driving investors towards riskier assets like Bitcoin.

The U.S. high yield B effective yield is currently 7.54%. Source: YCharts

Market Reactions and Election Uncertainty

Lowering interest rates generally results in reduced yields for safe-haven securities, prompting investors to seek higher returns in riskier assets like Bitcoin. Peterson notes that markets are often “flat and volatile” from September to October, and with the upcoming U.S. election on November 4, uncertainty is expected to be higher.

Bitcoin trades at $61,871 at the time of writing, down 5.08% over the past 30 days. Source: CoinMarketCap

This election-related uncertainty could further impact market stability. Contrarily, crypto analyst Scott Melker, known as “The Wolf of All Streets,” argues that rate cuts by the Fed do not always benefit markets outside of fixed-income investments. He cautions that “Rate cuts generally precede major dips,” suggesting that the broader market might not react as positively to rate cuts as some investors hope.

Image by fabrikasimf on Freepik

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