Crypto Tips posted a video on YouTube to describe why the Bitcoin price did not have a major price explosion following the Federal Reserve’s decision to cut the interest rate by 50 basis. This is the first time that will be happening since 2020.
The analyst argued that the interest rate cut does not affect the price of BTC in the short term, but rather the issue is the $1 trillion the Fed prints every 100 days to service debts.
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The Role of Open Interest and Leverage
The analyst argues that high open interest is the reason Bitcoin did not go up as anticipated. Many traders are making risky bets that the price will increase.
However, he warns that a lot of these traders are acting like gamblers, and many of them might have to sell their positions if they start losing money. He believes this could cause a short drop in Bitcoin’s price before it goes back up again.
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He compares the current period of price stability—lasting about six months—to past cycles, especially in 2020, when Bitcoin stayed in a similar range for about 160 days before it jumped up.
The BTC price went from $15,500 to $30,000 even when interest rates were going up. He predicts that after the expected sell-off, Bitcoin could rise to $100,000 or more. He believes that eliminating excessive leverage will make the market healthier, setting things up for a big rise.
Key Factors Influencing Bitcoin’s Price
According to crypto analysts, the main things affecting Bitcoin’s price are:
- Monetary inflation: the money the Federal Reserve is printing.
- High leverage and open interest in Bitcoin futures
- Accumulation phases, since Bitcoin has gone through similar quiet periods in the past that led to big price increases.
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