As global central banks prepare to cut interest rates, Bitcoin (BTC) could be on the verge of a significant price rally, potentially reaching $100K. The Federal Reserve, along with central banks in China, Canada, and South Africa, is signaling a more dovish monetary stance, which could create the perfect environment for Bitcoin’s price to soar.
Historically, when central banks lower interest rates, they increase the money supply to stimulate economic growth. This often leads to higher prices in equities and fixed-income assets. Since Bitcoin emerged, financial markets have observed a strong inverse correlation between the cryptocurrency and interest rates. When rates drop, Bitcoin prices tend to rise, largely due to its limited supply and appeal as a hedge against inflation.
A recent study by Fidelity Active Investor Learning Center highlights that while central banks do not directly control cryptocurrencies, their policies can have an indirect impact on crypto markets. Similarly, a report by SPGlobal found that since May 2020, Bitcoin has shown an inverse relationship with interest rates 75% of the time, making it highly responsive to rate cuts.
Several major central banks are now on the brink of easing monetary policy. In China, the government is expected to cut rates due to deflationary pressure on the yuan, which could create room for a policy shift. In Canada, central bank governor Tiff Macklem has signaled readiness for more substantial cuts than earlier in the year. Meanwhile, South Africa’s Reserve Bank is also anticipated to announce an interest rate cut soon.
This global trend towards lower rates has crypto analysts buzzing. Arthur Hayes, the founder of BitMEX and a prominent crypto figure, has predicted that Bitcoin could skyrocket as central banks increase the money supply. According to Hayes, “They will ramp up the money printer and dramatically increase the money supply,” which could lead to inflation and, in turn, boost Bitcoin’s price due to its finite supply. He believes the impact on BTC will be swift and substantial, potentially driving it to new highs.
With central banks across the world shifting to more accommodative policies, many investors are eyeing Bitcoin as a key asset poised for exponential growth. As the Fed and other monetary institutions prepare for a “soft landing” by easing rates, Bitcoin could be among the biggest beneficiaries, setting the stage for a potential price surge to $100K.