Ever since getting the approval for spot ETFs in early January, Bitcoin has been a little volatile, a trend that may worry some investors. The cryptocurrency surged 70% following the approval, experiencing dramatic gains initially but then lost momentum in mid-March, falling about 26% till early September.
Despite recent volatility and a downtrend, Bitcoin appears to be regaining momentum, rising 5% since the first week of September. The outlook for the digital currency remains encouraging for both the short and long term.
For investors with a long-term horizon, increasing exposure to digital currencies when prices are low can be a smart strategy. The long-term prospects for these assets remain bullish, driven by potential interest rate cuts from the Fed and a stable economic environment.
Interest Rate Cuts Could Propel Crypto Higher
It is certain that the Fed will implement a rate cut in September, with the only uncertainty being the magnitude of the cut. There is a likelihood of 73% that the Fed might lower the rate to 5-5.25% and a 27% likelihood of the rates falling to 4.75-5% in September, according to the CME FedWatch Tool.
The market has priced in a rate cut in December, too, with a probability of 41% of the interest rates falling to 4.25-4.5% and a 36.6% probability of interest rates falling to 4-4.25%. This increases the probability of the greenback losing its value.
The greenback’s value tends to move inversely with interest rate adjustments by the Fed, making the dollar less attractive to foreign investors, resulting in decreased demand for the currency and creating opportunities in digital currencies. The U.S. Dollar Index (DXY) has been trending downward since late June 2024.
Investors may view Bitcoin as an alternative to the depreciating dollar. Moreover, any Fed rate cut would boost risk-on sentiments, which, in turn, would help Bitcoin prices. This may push Bitcoin into bullish territory.
How Elections Could Shake Up Bitcoin Markets
Amid rising volatility in the broader market due to the upcoming U.S. Presidential elections, the crypto market also faces some vulnerability. Still, it is relatively less affected compared to other sectors.
Regardless of whether Trump or Harris wins the election, the outlook for cryptocurrency remains positive. Both Presidential candidates are poised to support favorable regulations for digital assets. Trump’s victory may lead to more relaxed policies that benefit crypto further, whereas Harris’s win is also likely to support the sector. Overall, it is a win-win situation for the cryptocurrency industry.
Story continues
Digital Asset Price Projections to Watch
Bernstein analyst Gautam Chhugani, as quoted on MSN, anticipates that if Trump wins the election, Bitcoin may reach new heights later this year, with prices as high as $80,000-$90,000 by December, nearly a 40-58% increase from current price levels. A favorable regulatory environment and eased crypto regulations could spark innovation in the sector and attract investments back into the sector.
Long-term forecasts for Bitcoin are highly optimistic, with expectations that the digital asset could surpass key psychological thresholds like $100,000 and even $500,000 by 2030-2035. The anticipated impact of three upcoming halving events by 2036 could further drive substantial gains in Bitcoin’s price.
According to Cathie Wood, as quoted on FXLeaders, Bitcoin is poised to surge by nearly 2,700%, potentially hitting $1.5 million by the end of 2030. While this projection may be overly optimistic and such a dramatic surge seems unlikely, it highlights the underlying bullish trends for Bitcoin. Venture capitalist Tim Draper also follows suit, reaffirming his $250,000 target.
According to Draper, Bitcoin has a lot of promise, especially as institutional investors and economies increasingly adopt the cryptocurrency.
ETFs to Consider
Below, we mention a few ETFs for investors to increase their portfolio’s exposure to Bitcoin and capitalize on its long-term bullish trend.
iShares Bitcoin Trust ETF IBIT gained 6.91% on Sept. 9 but has fallen by 10.53% over the past month.
Grayscale Bitcoin Trust GBTC gained 6.83% on Sept. 9 and 98.68% over the past year.
Fidelity Wise Origin Bitcoin Fund FBTC added 6.91% on Sept. 9 but has fallen 10.23% over the past month.
ARK 21Shares Bitcoin ETF ARKB gained 6.85% on Sept. 9 but is down by 10.52% over the past month.
Bitwise Bitcoin ETF Trust BITB gained 6.90% on Sept. 9 but has fallen by 10.52% over the past month.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Zacks Investment Research
