Last month, more than a few bitcoin enthusiasts were fascinated by the famous 4Chan bitcoin wizard who had called for bitcoin to reach $16,000 in October. The anonymous person made the bold forecast in January amidst bearish market sentiment, along with other price predictions for the price of bitcoin.
Unfortunately, this was not the case in October, despite the first two predictions coming to pass. While this came as a slight disappointment, there is still hope for bitcoin to hit $16,000.
Crypto analyst BitcoinGuru astutely observed late last month that bitcoin saw a head fake that satisfied a fractal. A fractal happens when historical price action happens on present time frames to a different extent. The fractal implies that the recent drop to $7,300 lows which was met by a dramatic upswing, is forecasting a huge rally that will take bitcoin past its June high of almost $14,000.
More importantly, BitcoinGuru highlights that if bitcoin holds above $9,350, he expects a rally to $16,000 by November 16. This is a 70% jump from the current level around $9,200. It looks too optimistic but keeping in mind that bitcoin recently surged by 42% within a few hours, it doesn’t seem impossible.
There’s a myriad of factors that can influence the price of bitcoin in the near future. According to some watchers, the ongoing Fed repo injections will ignite the next bull market – possibly to $16,000.
Fed Injections Have Become The Norm
On September 17, there was a surge in the overnight lending rate which shook the US financial system. This jump led to the Federal Reserve injecting hundreds of billions of dollars into the financial system in an effort to keep the markets calm. In addition, the Fed also started buying monthly treasury bills worth $60 billion from mid-October to maintain the lending rate within the designed range.
This Fed intervention which was intended to be a short-term fix, has, however, prolonged. The Fed began injecting $75 billion into the markets before soon increasing to $120 billion and these operations don’t seem to be ending soon.
Traditional assets in most times display some correlation with each other. But bitcoin and other digital assets are oftentimes hailed as exceptions. Yet, in reality, these markets seem to have some connection in the way they move on a weekly basis.
However, it’s pretty hard to predict what this exactly means for bitcoin price, at least in the short to medium term but the fact that the Fed has printed more money than bitcoin’s overall market cap makes a strong case for the decentralized asset.
Repo Operations Mean Bitcoin Wins
Predictably, some crypto analysts have viewed this alarming scenario with exuberance. A couple of bitcoin HODLers spoke about this repo market story advising people to buy bitcoin because as an emerging safe haven, the top coin is bound to benefit from the dovish policies by the Fed.
If nothing else, this is where bitcoin provides a useful lens with which to evaluate the current stress in the financial system, particularly the money markets. It helps us see how dovish policies create weaknesses and systemic risks and how bitcoin was designed to resolve such.
On that account, with validation from China, the Fed repo operations and the imminent supply disruption that will bump up scarcity for bitcoin, the future has to be brighter. We hope, anyway.
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