Bitcoin (BTC) Price May Climb Toward $70,000 Soon, Here's Why

Bitcoin (BTC), the world's largest cryptocurrency, is currently on a bullish momentum as it breached the psychologically important level above $61,000.

Bitcoin (BTC) is showing bullish momentum by breaking above the psychologically important level of $61,000. As global macroeconomic trends shift, here are three reasons why BTC prices may climb toward $70,000 soon.

The Federal Reserve’s decision to cut interest rates remains a major factor that could push Bitcoin toward $70,000. In recent years, the US and global financial ecosystem has grappled with the uncertainty of inflation. The uncertainties were also fueled by the responses of central banks, such as the Federal Reserve rate hikes.

To combat the inflation associated with the COVID-19 pandemic outbreak, the Federal Reserve was prompted to implement rate hikes. The Fed’s priority was to maintain inflation at a level close to 2%, which they believe will benefit the masses.

Now, following a series of interest rate increases over the past few years to combat inflation, there are signs of improvement in the economy. This milder inflation is evident in the recently released US economic data, which indicates a readiness for interest rate cuts.

Market experts had projected a possible rate cut by September. Notably, Fed Chair Jerome Powell’s speech at the Jackson Hole Summit on August 23 confirmed the speculations. “We do not seek or welcome further cooling in labor market conditions. The time has come for policy to adjust. The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks,” Powell stated.

An eventual rate cut will inject massive cash into circulation, which will devalue the dollar in the short term. This is a positive twist that could benefit Bitcoin. If this scenario unfolds, BTC’s status as a hedge and store of value may attract more people to adopt it.

When interest rates rise, companies typically find it more expensive to raise capital. For example, they will have to pay higher interest rates on the bonds they issue. As a result of rising interest rates, expectations for future profits may be revised downward.

On the other hand, a possible US Fed rate cut might provide a lasting boost to tech stocks. Top AI companies like NVIDIA may lock in their remarkable valuations as a key confluence between the stock market and the crypto industry.

Cryptocurrencies are generally highly correlated to stocks, bonds, and commodities. As a result, their prices or valuations tend to follow the same trajectory. If the stock market rallies on an expected rate hike, Bitcoin’s price might rise to $70,000.

As interest rates fall, legacy financial products usually lose their appeal. This paves the way for the Bitcoin spot ETFs to take center stage. This investment vehicle tracks Bitcoin’s price, allowing investors to gain exposure in a regulated manner.

Over time, Bitcoin has outperformed the S&P 500 and other Treasury Bills. As a result, spending will increase significantly if the Fed rate cut materializes. Consequently, inflation will accelerate, making Bitcoin a more attractive hedge.

Earlier, it was reported that mainstream entities like the State of Wisconsin Investment Board (SWIB) and Morgan Stanley are already hedging their bets with BTC. Over time, the number will rise

According to the latest market data, the BTC price was $61,617, up 1.7% in 24 hours and 5.8% in the last seven days. However, trading volume decreased by 31.9% to $24 billion, while the market capitalization stands at $1.2 trillion.