Tom Lee, the Chairman of Bitmine Technologies, predicted that Bitcoin would “easily” reach $200,000 within this year, while the largest cryptocurrency is trading at around $113,000.
Lee explained that potential interest rate cuts by the Federal Reserve (Fed) would be a key catalyst for Bitcoin’s price appreciation.
Monetary Policy and Market Sensitivity
In a televised interview, Lee explained that cryptocurrencies like Bitcoin and Ethereum (ETH) are susceptible to changes in monetary policy. He highlighted the upcoming Fed monetary policy meeting on September 17th as a crucial turning point for a rate cut decision and the subsequent rise of BTC.
His recent actions may influence this forecast. Lee, a long-time analyst, financial advisor, and entrepreneur, recently assumed the role of chairman at Bitmine, an Ethereum DAT company. Now he has dual roles at Fundstrat Capital, a self-established finance company, and Bitmine.
According to the CME Group’s FedWatch Tool, market participants are anticipating three rate cuts this year and six by September of next year, equating to a 1.5% point reduction over the next year.
However, the current state of the US economy appears robust for such extensive rate cuts. The unemployment rate stands at 4.3%, remaining close to full employment, and the three major US stock indices have repeatedly hit all-time highs since the end of June.
The Looming Possibility of a Downturn
Despite the positive indicators, some experts point to a potential for a sharp deterioration in the employment situation. Recent employment data, including NFP data from July and August, has shown signs of a rapid downturn.
On Tuesday, the BLS will likely release a preliminary benchmark revision to its labor market data showing a decrease of approximately 800,000 jobs. If this data aligns with expectations, the Fed might have to implement more than six rate cuts. A 50bp cut could even be on the table at the September FOMC meeting.
Lee noted that cryptocurrency prices have historically shown strength in the fourth quarter of each year. He projects that this year will be no exception and that the combination of this seasonal trend and Fed rate cuts will lead to a strong rally. Bitcoin should gain another 77% to reach Lee’s predicted price of $200,000.
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