Bitcoin Rally: Bulls Back in Control? -Blox

Bitcoin has surged past $60,000, the German government has completed its bitcoin sale, and macroeconomic conditions are all pointing to the Fed’s first rate cut in September. Are we heading for a bullish second half of 2024?

A favorable macroeconomic environment for Bitcoin

The macroeconomic environment for Bitcoin is now starting to turn very positive again. The unemployment rate rose to 4.1%, the highest level since November 2021, job growth was at its slowest since March 2021, wage growth was at its lowest level since May 2021, and core PCE inflation was at its lowest level since March 2021.

Everything points to the US economy slowing down and the Federal Reserve may start cutting interest rates in September. And that realization now seems to have reached the price of Bitcoin.

Since inflation started to rise in the first quarter of 2024 and the market became uncertain about how many interest rate cuts the Federal Reserve would implement, the Bitcoin bull market has largely stalled.

Now that narrative is changing again, inflation is finally coming down, and the odds of a Fed rate cut are growing — to the point where people are already speculating about three rate cuts.

Part 2 of the Bitcoin bull market?

Whether Bitcoin can now enter the second part of the bull market depends on several factors. The fact that we may get the first interest rate cut in September is positive in principle for the cryptocurrency, but it is not what will make the difference.

Ultimately, it comes down to a 0.25% rate cut, and that of course cannot in and of itself lead to new highs at all. You also have to look at it primarily as a story, which is very important.

We’re moving from a narrative where everyone was very bearish on the number of interest rate cuts by the Fed, to a narrative where everyone was positive on interest rate policy.