Bitcoin (BTC) price rose 3.2% from October 27 to October 28, briefly testing the $69,200 level for the first time in a week. Although the rally has faced some resistance, Bitcoin bulls believe the conditions are in place for a sustained uptrend, especially considering recent socio-political and economic developments.
US 6-month Treasury yield (left) and oil WTI/USD (right). Source: TradingView
To start the week, oil prices fell more than 5.5% on October 28 after ongoing conflict in the Middle East failed to impact energy production or transportation channels. Israel launched an attack on Iran over the weekend. However, as CNBC reported, no oil or nuclear facilities were targeted.
Traders who initially turned to oil as a hedge against Middle East tensions may now seek alternative protective assets as regional uncertainty persists. According to CNBC, Israel and Iran have been waging a ‘shadow war’ for over a year, but US officials have warned Israel not to target Iran’s nuclear facilities.
Will uncertainty help Bitcoin price?
Inflation remains a major concern that could push traditional financial investors towards alternative assets. While higher prices may support corporate profits in the short term, persistent inflation will eventually put pressure on consumers to cut spending.
Corporate earnings often reflect past consumer demand, creating a “lag effect” when companies report previous quarterly results, which can obscure the real-time impact of inflation on spending trends.
The next US inflation report is due to be released on October 31st, followed by the Federal Open Market Committee meeting on November 7th. Analysts expect the core personal consumption expenditures (PCE) index to rise 0.1% to 0.3% in September. In August. Both the PCE index and labor market data are among the Fed’s preferred indicators for policy decisions.
US Personal Consumption Expenditure Index. Source: Federal Reserve Bank
According to Wil Stith, fixed income portfolio manager at Wilmington Trust, “I think they (the FOMC) have cut it by 50 basis points before, so I think we can talk about a pause.” Even though most markets expect further rate cuts, the biggest risk now is the conservative Federal Reserve pausing interest rate adjustments to better gauge the risk of the economy overheating.
Additionally, with the U.S. presidential election now less than 10 days away, investors are becoming more risk-averse, relying on cash and short-term Treasury securities to cushion against potential surprises. History shows that opinion polls can sometimes be off target, which makes everyone nervous.
Whichever candidate wins, reduced post-election uncertainty could encourage flows into risk assets, including Bitcoin. From a socio-political perspective, conditions appear to support a sustainable Bitcoin rally, but some factors pose risks, causing traders to hold off on potentially more significant bullish moves.
relevant: Bitcoin needs this one thing to stay at $70,000.
It should also be taken into account that higher-than-expected inflation, which reduces the likelihood of further stimulus from central banks, highlights Bitcoin’s fixed and predictable monetary policy. Additionally, the victory of US presidential candidate Kamala Harris may signal a more transparent approach to cryptocurrency regulation, but may not have an immediate impact on digital assets.
So even if Bitcoin fails to hit all-time highs in 2024, there is reason to expect its price to remain favorable for gains in early 2025.
This article is written for general information purposes and should not be considered legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.