Why Bitcoin Price Can Build an Uptrend
Bitcoin price is trading steadily above critical support levels and may extend its bullish trend in the coming days. The cryptocurrency reacted positively to current macroeconomic conditions despite the US Federal Reserve’s (Fed) pledge to continue raising interest rates.
At the time of writing, the Bitcoin price is trading at $20,700 with a 3% loss over today’s trading session and sideways movement over the past week. This period has been profitable for digital assets against traditional assets, such as stocks, for the first time.
Reasons Why Bitcoin Price Will Remain Bullish
Cumberland Investment Company mean Bitcoin price is building the foundation for a more significant uptrend. The firm claims this bullish price action will be supported by macroeconomic factors and a “growing drumbeat of progress in digital asset adoption.”
Cumberland believes that the US dollar, as measured by the DXY index, is showing weakness on the first of these factors. The currency has risen in recent months. This bullish price action negatively affected the Bitcoin price and the value of other assets, including stocks and gold.
A crash in the DXY index will give Bitcoin some room to run into Q4 2022. Over the past two years, the cryptocurrency has seen a new all-time high in November and December. This period stands as one of the most bullish for digital assets in its history.
Cumberland added the following about DXY’s price action, and the reason for its weakness:
This rally appears to have peaked, likely a result of expectations that the Fed will reverse course in mid-2023. In other words, the market-implied terminal rate of 5.5% is much scarier when short-term rates are locked at 0% than when they fluctuate around 4%.
The current status quo will persist unless an unexpected macro event occurs, such as a higher than expected inflation print. Other sources of uncertainty, the Russia-Ukraine war problems with supply chains, reached a “state of jagged equilibrium.”
US politics may favor crypto
In the short term, there is growing uncertainty around American politics. Tomorrow, the country will elect a new congress. The results of this election will have significant consequences for the crypto market and the global economy. In that sense, it is more likely that the Bitcoin price will trend higher.
A Republican controlled Congress could favor the Bitcoin price and digital assets in the crypto industry. In contrast, Democrats are perceived as hostile or less inclined to legislate in favor of the nascent industry. Of a possible Republican victory, Cumberland wrote:
In the event that Republicans manage to regain control of the legislative branch of government, it would seem unlikely that they would usher in an era of fiscal austerity. Instead, we should expect a tilt towards lower taxes, higher stimulus and easier regulation. Similarly, we should expect a less adversarial environment in Washington for crypto (…).