Bitcoin (BTC) Set for Surge as US Interest Rate Cut Looms: A Deep Dive into the Crypto Market Shifts

• Bitcoin’s trading range is expected to remain stable until a more favorable macroeconomic environment arises, according to CryptoQuant’s analyst.
• Despite a slight increase in global liquidity, the year-on-year change in the global money supply (M2) has returned to normal levels early this year.
• Market conditions suggest potential for a more substantial rally within this cycle, possibly around the anticipated first US interest rate cut in September.

Bitcoin’s trading range is expected to remain stable until a more favorable macroeconomic environment arises. The current market conditions suggest potential for a more substantial rally within this cycle.

Bitcoin Trading Lacks Momentum

Over the past couple of months, Bitcoin has been trading without much upward or downward movement. In the past, the world’s leading cryptocurrency’s most significant growth periods were linked to substantial increases in the global money supply (M2), indicating times of ample liquidity and high investor risk appetite. These periods usually witnessed a flood of new capital into the market, often ending with peaks driven by retail investors’ fear of missing out (FOMO). Interestingly, this pattern hasn’t emerged in the current cycle, as per CryptoQuant’s analyst Gustavo Faria.

Global Liquidity and Bitcoin

Despite a slight rise in global liquidity in the past year, which benefited Bitcoin, the year-on-year change in M2 has returned to normal levels early this year. This change followed consistent inflation data in the US, which reduced market expectations for interest rate cuts from five to two in 2024.

Potential for a More Expressive Rally

There’s a lack of any immediate signs indicating a surge in demand that could significantly drive prices up, as noted by the on-chain intelligence platform’s data. On the supply side, the selling pressure has lessened as long-term holders (LTHs) have seen price stability around $60k, and short-term holders (STHs) have reduced sales due to decreased profitability. In such a scenario, it’s likely that the market will continue its sideways movement until triggers emerge that can prompt a decisive change. The current market conditions, including factors like profitability, leverage, and the distribution of coin ages, suggest there’s potential for a more substantial rally within this cycle.

Conclusion

The most likely scenario is that Bitcoin will remain within this trading range until a more favorable macroeconomic environment emerges, possibly centered around the anticipated first US interest rate cut in September. Such an environment could ignite a new wave of demand and subsequent rally, marking the peak of the cycle. Galaxy Digital’s Mike Novogratz expressed a similar opinion yesterday, suggesting that BTC’s price would trade between $55,000 and $75,000 until the Fed cuts the rates.