The U.S. Federal Reserve anticipates an increase in cash circulation, which is encouraging investor optimism. This prediction follows a substantial decrease in the US Reverse Repo rate. Analysts have stated that further reductions in the US Reverse Repo are likely to prompt the Federal Reserve to intensify its money printing activities. It’s also suggested that lower US Reverse Repo rates could lead to increased investments in Bitcoin, as investors might choose to move their funds towards digital assets, particularly Bitcoin, given its position atop the price charts.
US Fed Tracks US Reverse Repo Drop
The Federal Reserve in the United States is focusing on the U.S. Reverse Repo facility, which has dropped below $100 billion recently. Remarkably, there was a decrease of $65 billion in just two days. It’s important to note that a drop in the U.S. Reverse Repo is significant because it indicates the amount of money circulating within the economy. More liquidity could lead investors to feel more confident about investing in riskier assets like cryptocurrencies, such as Bitcoin.
As an analyst, I’m seeing a surge in investor confidence as the reported US Consumer Price Index (CPI) stands at 2.9% for December 2024. While this figure exceeded initial predictions, investors remain hopeful that inflation will eventually approach the target of 2%. The anticipated reduction in interest rates by the US Federal Reserve only twice may be counterbalanced by recent drops in the US Reverse Repo rate, which could sustain investor optimism.
Rising Yields on Long-Term US Debt
Currently, returns on long-term U.S. Treasury bonds are approximately 5%, causing many nations, like Britain, to reconsider their investment strategies. High yields on U.S. debt tend to discourage risky investments globally, reducing the amount of funds that would typically flow into such investment portfolios.
As a researcher, I find myself buoyed by the resilience in the U.S. financial landscape, particularly the Reverse Repo market and the robust employment data. These factors, coupled with the anticipation of effective inflation control measures, are fostering a sense of confidence among investors. Moreover, there’s a growing expectation that President Donald Trump may overhaul cryptocurrency regulations to enhance investment accessibility and investor convenience.
Bitcoin (BTC) Rally Ahead?
In light of the anticipated risk tolerance among investors, it is forecasted that Bitcoin (BTC) could receive investments much like it did in 2021. It’s possible that the Federal Reserve will continue with quantitative easing, but Arthur Hayes speculates that instead of increasing the national debt, the U.S. Treasury might boost market liquidity by spending funds directly from its General Treasury Account (TGA).
Once more, the BTC price surpassed the $102k mark, currently standing at $101,634. Over the past week, it has experienced an 8% growth and a staggering 140% increase over the last year. Moreover, there’s been a 0.71% boost in its 24-hour trading volume and a rise of 1.84% in open interest, as reported by Coinglass.
Apart from that, the continuous surge in Bitcoin’s value has exceeded many experts’ predictions, reaching over $100k. Additionally, a second wave of investment into spot Bitcoin Exchange-Traded Funds (ETFs) suggests growing investor enthusiasm. Importantly, the inflow into Bitcoin ETFs reached approximately $626.1 million, with BlackRock’s IBIT leading this trend.
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2025-01-17 11:48