“Bitcoin will reach its all-time high after September” :: Sympathetic Media Newsis ::

Highblock Capital CEO claims in MarketWatch interview

“Risk asset preference increases when interest rates are cut…Bitcoin purchases increase”

[홍콩=AP/뉴시스] As the U.S. Federal Reserve (Fed) is sending a strong signal for a ‘September base rate cut’, there is a claim that Bitcoin, the leader in virtual currencies, could reach its highest price ever after the interest rate policy change. The photo shows an advertisement for the cryptocurrency Bitcoin on a building in Hong Kong on November 18, 2021. 2023.2.2

[서울=뉴시스] Reporter Park Gwang-on = As the U.S. Federal Reserve (Fed) is sending a strong signal for a ‘September base rate cut,’ claims have been made that Bitcoin, the leader in virtual currency, could reach its highest price ever after the interest rate policy change.

This is because the increased preference for risky assets due to interest rate cuts could lead to strong Bitcoin buying.

The American economic media outlet MarketWatch reported this on the 28th (local time) through an interview with Shubh Varma, co-founder and CEO of cryptocurrency research company HighBlock Capital.

First, Varma diagnosed that Bitcoin is likely to reach its all-time high between September, when the possibility of a base rate cut is high, and November, when the U.S. presidential election is held.

Jerome Powell, Chairman of the U.S. Federal Reserve (Fed), sent a clear signal of a September interest rate cut, saying on the 23rd, “The time has come to adjust monetary policy.”

Accordingly, the Chicago Mercantile Exchange (CME) FedWatch Tool reported that investors see a 100% chance of a September rate cut. Specifically, the probability of a 0.25%p cut was 65.6%, and the probability of a 0.50%p cut was 34.5%.

Usually, when market interest rates fall, there is a tendency for preference for risky assets such as stocks, real estate, and Bitcoin to increase. This is because although the risk of loss is high, the possibility of relatively high returns is also high.

In particular, Varma analyzed that the open interest in Bitcoin futures has increased significantly this year compared to last year, and that the increased preference for risky assets due to interest rate cuts could lead to Bitcoin purchases.

Open interest is the total number of outstanding contracts at the end of the trading day. A higher number of open interest indicates greater trading activity in the market.

Bitcoin hit an all-time high of $73,700 in March, and has since traded between $50,000 and $72,000 over the past few months.

Varma also said that if Bitcoin approaches or breaks its previous all-time high of around $773 million, it would spark selling by retail investors.

“They will come back to cryptocurrencies, and the open interest will increase again,” Varma said. “That will lead to more volatility and potentially another rally.”

In addition, as the virtual currency ‘Toncoin’ issued by the social media (SNS) Telegram plummeted due to the indictment of the platform’s head, some have expressed the opinion that this volatility could actually have a positive effect on buying power.

Earlier on the 23rd, Telegram founder and CEO Pavel Durov was arrested at a French airport and was provisionally charged on the same day.

They were charged with conspiring to commit crimes such as systematic distribution of child sexual exploitation material and drug trafficking, and conspiring to manage an online platform that enables illegal transactions by a criminal organization.

As Telegram’s leader was brought to trial, the stock price of the messenger’s payment method, ‘Toncoin’, fell by about 17%.

Despite this, Varma analyzed that open interest for Toncoin has reached an all-time high over the past few days, “showing that the market is actively looking for opportunities even in an atmosphere of uncertainty.”

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