**“Bitcoin May Be on the Brink of a Major Upsurge,” Analyst Claims, Justifying His View**
An analyst has put forward the notion that Bitcoin’s price could be gearing up for a significant upturn, a premise he substantiates with compelling data.
**Author:** Mete Demiralp
**Date:** 23.09.2024 – 19:35
**Update:** 10 hours ago
Recent analyses indicate that Bitcoin (BTC) might be ready for a notable rally, particularly as financial conditions in the United States begin to ease.
The Chicago Fed’s National Financial Conditions Index (NFCI) serves as a crucial barometer, tracking the state of money, debt, and equity markets. This index provides weekly insights into liquidity, credit availability, and market risk. A negative NFCI value suggests more relaxed financial conditions, fostering an environment where liquidity is abundant and capital flows more freely.
Fejau, host of the Forward Guidance Podcast, has recently emphasized the inverse relationship between the NFCI and Bitcoin through a series of posts on X (formerly Twitter). He posits that relaxed financial conditions often serve as a catalyst for riskier assets like Bitcoin, which flourish in a more “risky” environment.
His analysis spans multiple Bitcoin market cycles. For instance, in 2013, as financial conditions became more favorable, Bitcoin’s price surged from $100 in July to over $1,000 by November, coinciding with the NFCI plummeting to -0.80. A similar trajectory was observed in late 2017, when Bitcoin skyrocketed from $2,000 to $20,000 as conditions eased.
In more recent times, over the past year, the NFCI has once again indicated a loosening of financial conditions, which has contributed to Bitcoin’s rise from $25,000 to over $73,000 in March 2024, even prior to global central banks beginning to cut interest rates.
However, Fejau cautions that other variables, such as the strength of the US dollar, also influence Bitcoin’s performance. An increase in the DXY index, which gauges dollar strength, typically adversely affects BTC by rendering speculative investments less appealing.
The NFCI was noted at -0.56 for the week ending September 13, indicating a further easing of financial conditions from the already loose levels of the preceding week.
*This is not investment advice.*
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