Table of Contents
- Quick Facts
- Reason #1: Monetary Stimulus in China and Europe
- Reason #2: Weaker US Dollar and Bitcoin Miners’ Long-term Commitment
- Reason #3: Decoupling from Traditional Markets
- Reason #4: Sentiment and Momentum
Quick Facts
4 Reasons Why Bitcoin Price Could Rally to $90K in April
As the world grapples with the crisis brought about by the ongoing trade war, the world of cryptocurrencies is abuzz with anticipation. One of the most significant players in this space is Bitcoin, which has been gaining traction in recent weeks. According to various indicators and market trends, there are four key reasons why Bitcoin price could rally to $90K in April.
Reason #1: Monetary Stimulus in China and Europe
As central banks respond to the threat of an economic recession, there is an increasing likelihood of an increase in monetary supply. This is particularly evident in China, where new bank loans in March rebounded more than expected to $500 billion, a significant recovery from the previous month’s decline. According to Reuters, the People’s Bank of China (PBOC) has promised to increase stimulus measures to reduce the impact of the trade war with the United States.
Similarly, the European Central Bank (ECB) cut interest rates for the seventh time in a year to support the eurozone economy. The ECB has lowered the cost of capital to its lowest level since late 2022. These monetary stimulus measures can lead to increased liquidity and higher asset prices, including Bitcoin.
Reason #2: Weaker US Dollar and Bitcoin Miners’ Long-term Commitment
Further adding pressure on the US Federal Reserve to end its restrictive monetary policy is the weakening of the US dollar compared to major global currencies. The DXY Index has dropped to its lowest level in three years, which can be positive for the current account balance but unlikely to last during a trade war.
Moreover, investor confidence has been hurt by US President Donald Trump’s public criticism of Fed Chair Jerome Powell’s administration. This situation makes it harder for the US Treasury to rely on issuing Treasurys to stay afloat, which further weakens the US dollar.
On the other hand, Bitcoin miners have shown a strong long-term commitment to the asset. The hashrate, a measure of the computing power devoted to the Bitcoin network, has increased by 8% compared to the previous month. Since the Bitcoin halving in April 2024, traders were worried that lower profits would cause many miners to leave, possibly leading to a sell-off. However, the increased hashrate suggests that miners are willing to bear the costs to maintain their operations, which can support the price of Bitcoin.
Reason #3: Decoupling from Traditional Markets
Bitcoin’s decoupling from traditional markets is a significant trend that needs to be considered when assessing its potential for rally. Although the S&P 500 index has dropped 5.7% in April, Bitcoin price jumped to $85,000. This phenomenon has been observed before, where Bitcoin prices increased while traditional markets were declining.
According to a report by Bloomberg, the correlation between Bitcoin and the S&P 500 has broken down over the past year. In other words, Bitcoin is becoming less dependent on the performance of traditional markets, which can lead to increased volatility and price movements in both directions.
Reason #4: Sentiment and Momentum
Finally, market sentiment and momentum must be considered when analyzing the potential for a Bitcoin price rally. Although investors are cautious, the strong long-term commitment from miners and the potential for monetary stimulus in China and Europe can create a positive sentiment around Bitcoin.
The momentum indicator, which is calculated by plotting the rate of change in the price of an asset over a given period, is also supportive of a potential rally. The momentum indicator has been trending upwards over the past few weeks, suggesting that the price of Bitcoin is gaining steam.
