Bitcoin (BTC) Price analysis: Retesting Previous Highs of Around $60,000

Bitcoin (BTC) price analysis: Retesting previous highs of around $60,000

output: Bitcoin, the flagship cryptocurrency, has come a long way since its debut on the deep web in 2009. During this time, its price has surged drastically, and now we are witnessing increasing institutional involvement in the crypto ecosystem.

Cryptocurrency adoption has grown, and many traditional market players are stepping in, including through the recent launch of Bitcoin ETFs. Despite a decrease in inflows this September, these ETFs have been a success.

Over the years, Bitcoin price has shown varying levels of short-term correlation with stock and bond markets. It has also been susceptible to monetary policies and various macroeconomic indicators.

Early on, Bitcoin seemed unaffected by interest rates, but according to NYDIG, that has changed. As Bitcoin's adoption and ownership among traditional market investors grew, its price has become more sensitive to factors like interest rates.

The importance of macroeconomic aspects in Bitcoin analysis is further confirmed by research from Austin Adams (Unisop Labs), Markus Ibert (Copenhagen Business School), and Gordon Liao (Circle Internet Financial). Their findings show that Bitcoin's returns are closely linked to “classic finance” factors, such as monetary policy and risk premiums, much like traditional assets (e.g., stocks and bonds).

To determine which factor had the greatest influence on Bitcoin's returns in a given period, the researchers broke down its performance into three aspects: monetary policy, risk premium (the additional returns for holding a riskier asset), and the demand for cryptocurrency itself.

For example, during the 2020 rally, monetary policy contributed 50 percentage points to Bitcoin price growth. In contrast, tighter monetary policy in 2022 was responsible for a 50%-point decline, meaning Bitcoin's performance would have been much stronger if the Fed had not implemented restrictive monetary policies that year.

Now, let's attempt a medium- to long-term analysis of Bitcoin. Currently, BTC is retesting its previous highs of around $60,000.