Is there a green light for a “bull run”?

Investors have their eyes set on what may happen to the price of bitcoin (BTC) this “Super Wednesday.” This June 12th the consumer price index (CPI) of the United States and the decision of the Federal Reserve of that country (FED) on interest rates.

The market could react with high volatility to the data that will be known in the coming hours. In this framework, the question arises as to whether there is a green light for BTC to surpass its all-time high (ATH) of $73,700, which it reached on March 14. If this happens, the digital ecosystem may witness a new “bull run.”

In advance of these announcements, BTC started Tuesday with a price around $67,000, which represents a drop of 3.5% compared to the previous day. Meanwhile, exchange-traded funds (ETFs) broke a streak of 19 days with a positive balance on June 10 and recorded net outflows of $65 million. This is reflected in the following graph:

Crucial hours are coming for bitcoin

This Wednesday, the Federal Open Market Committee (FOMC) will meet to analyze the upcoming decisions on US monetary policy and will define whether there is a reduction in interest rates or whether they remain around between 5.25 and 5.50%, the highest level in the last 10 years.

As Criptonoticias already reported, the FOMC is a component of the FED, which is the central bank of the United States. It decides on the federal funds rate, which is the interest rate at which banks lend money to each other in the short term. This rate influences other interest rates in the economy, including lending rates and savings rates for consumers and businesses.

A High interest rate may negatively affect BTC price. This occurs because investors will seek refuge in more traditional and less risky assets such as Treasury bonds.

High rates also make credit more expensive, so companies and traders will be less likely to request loans and acquire assets with high volatility.

This lower liquidity may decrease demand for the digital currency, which may push its price away from the $73,000 barrier.

If the interest rate is reduced, on the other hand, investors tend to transfer their capital towards riskier assets, with the aim of obtaining higher profits.

Within this framework, Senators Elizabeth Warren, Jacky Rosen and John Hickenlooper demanded that the FED “reduce the federal funds rate from its current maximum level in two decades of 5.5 percent.” The writing highlights:

“This sustained period of high interest rates is already slowing the economy and failing to address the remaining key drivers of inflation.”

Elizabeth Warren, Jacky Rosen and John Hickenlooper, United States Senators.

According to the CME FedWatch tool, the probability that the FED will announce a reduction in interest rates is only 0.6%. In this framework, operators project that there is a 50% probability that a cut will occur starting in September.

Inflation in the last 12 months in the United States was 3.4% and it is estimated that it could remain at that figure. However, the focus will be on the monthly report, which is expected to be 0.1%, according to Investing’s projections. If it is that number, it could be a trigger for the FED to analyze lowering rates and raising the price of BTC.

In this regard, Jack Manley, the JPMorgan Chase strategist, maintains that the current FED rate range of 5.25% to 5.50% is actually inflationary right now, and that prices will not stabilize further until the central bank begins to cut. He explains:

«A lot of what is happening today with inflation can be linked very closely to the level of interest rates. Inflation is cut and cut, and whether you look at the main number or the base number, it is taken out of the goods equation; “Much of that has to do with the rate environment.”

Jack Manley, the JPMorgan Chase strategist.

In this framework, another piece of information that may influence the FED’s decision is the employment data in the United States: 272 thousand employee positions were generated in May. A figure much higher than the 190 thousand that were projected.

In this regard, Andrew Hollenhorst, chief economist at financial giant Citigroup, detailed in a report that “we are changing our base case for the first rate cut from July to September.” On that note, he added that May’s “surprisingly strong job growth” will likely hold off the FED as it “waits for more data on slower activity and inflation.”

Bitcoin needs a catalyst that drives demand

In this context, the Spanish market analyst and trader who is known on social media as Santino Cripto, pointed out in his personal X account that BTC needs a “new catalyst” to break through the resistance zone of $71,000 and market enters a “bull run”. Below is the movement of this digital currency in the last year:

Likewise, it clarifies that some of these events that drive the price of the digital currency are the speech of the head of the FED, Jerome Powell, anticipating a drop in interest rates for the coming months. In addition to increased demand for BTC spot ETFs and the launch of these ether (ETH) instruments, the native token of the Ethereum network.

Since these BTC funds came to market on January 11, 2024, they have accumulated more than $15.56 billion in net inflows.

As Criptonoticias already reported, capital inflows into these financial instruments could generate a favorable scenario for the BTC price. This is because ETF issuing companies must buy and hold bitcoin to back their shares.

Due to the law of supply and demand, this dynamic generates a scenario for an eventual increase in the price of BTC.

Regarding ether ETFs, Michael Saylor, director of software services company MicroStrategy, noted that their market launch It is a boost for the digital asset industry.

“I think it’s good for bitcoin. In fact, it may be better for bitcoin because we are more politically powerful when there is support from the entire cryptocurrency industry. The cryptocurrency industry also has a lot of political power, a lot of users, and serves as another line of defense for bitcoin,” Saylor stated in his participation in the “What Bitcoin Did” podcast.

Saylor believes that everything that is happening will lead major investors to allocate money to these types of financial products or even directly into digital assets.

In that case, he estimates they could invest 5% to 10%, but BTC will make up 60% to 70% of that allocation. Therefore, he believes that everything that happens in terms of regulation and approval of ETFs could accelerate institutional adoption.

According to Eric Balchunas, ETF specialist at Bloomberg Intelligence, these ETH funds could be launched at the end of June, but the key date is tipped to be July 4.

In the midst of this speculation and market analysis, there is a bull that is digging in the dirt. His body is increasingly tense and his breathing quickens as time passes. He is waiting for a green light that will allow him to bring out all his strength on the price of BTC.