Bitcoin Price Eyes $70k as MicroStrategy Invests Another $458M after Fed rate cut

Bitcoin Price Analysis:

Bitcoin price crossed the $64,100 mark on Sept 20, up 22% in 14-days, the rally has been linked to MicroStrategy’s latest $458.2M BTC buys and US Fed rate cut.

Why is Bitcoin Price Going Up?

BTC Gains 22% on Fed Rate Cut and Institutional Investment

Bitcoin surged to a 25-day high of $64,129 on September 20, driven by two main catalysts: the Fed’s easing of interest rates and MicroStrategy’s substantial BTC investment.

The BTCUSD daily price chart above shows how Bitcoin price climbed 22% in the last 14-days, moving from $52,568 to hit $64,128 at the time of writing on Friday Sept 20.

The rally started around September 6, when the U.S. Bureau of Labor Statistics released dovish Non-Farm Payroll data. This was followed by the release of CPI figures on September 11, showing record inflation levels.

As expected, the Federal Reserve announced its first rate cut since 2020 on September 18. However, recent market reports show that other bullish catalysts have since emerged.

Bitcoin Breaks $60k on Fed’s First Rate Cut in 4 Years

On September 18, 2024, the Federal Reserve cut the federal funds rate by 50 basis points (bps), marking its first rate reduction since March 2020. While markets had expected a cut, there was uncertainty about whether it would be a more conservative 25 bps reduction.

As the Fed meeting commenced on September 17, Bitcoin had already reclaimed the $60,000 level, with investors anticipating a moderate cut. However, the 50 bps cut unleashed a wave of buying pressure, pushing BTC past $62,000 within 24 hours of the announcement.

The Fed has signaled further easing, with 100 bps in total cuts expected by year-end. For 2025, another percentage point of reductions is anticipated, followed by a final 50 bps cut in 2026. If these rate cuts materialize as forecast, Bitcoin could enter a prolonged bull cycle as investors shift capital away from bonds and treasury bills into risk assets like BTC.

MicroStrategy Purchases Another $458.2M in Bitcoin

On September 20, MicroStrategy CEO Michael Saylor revealed that the company purchased an additional 7,420 bitcoins for $458.2 million. This latest acquisition brings the company’s total BTC holdings for 2024 to 63,070 BTC, with an overall treasury of more than 252,220 bitcoins, acquired at a cumulative cost of $9.9 billion.

Since adopting a Bitcoin-focused corporate strategy in 2020, MicroStrategy has treated Bitcoin as both an inflation hedge and a store of value. With over 252,000 bitcoins now worth more than $15 billion, the company has significantly boosted shareholder value.

MicroStrategy has funded its Bitcoin purchases primarily through convertible senior notes, raising over $1 billion in recent offerings to fuel further acquisitions.

US Companies Adopting “Bitcoin Buying” Strategy

Other public companies are starting to adopt a similar strategy. Cathedra Bitcoin (CBIT), initially a mining company, is pivoting away from mining to focus on data center services. The company plans to use profits from this new venture to purchase Bitcoin directly from the market, citing unpredictable mining margins as a reason for the shift.

Cathedra’s strategy reflects a broader trend where companies look to accumulate Bitcoin for shareholders rather than relying on traditional mining operations. This shift, combined with the continued devaluation of the U.S. dollar in a low-interest-rate environment, could encourage more firms to follow suit and invest in Bitcoin.

MicroStrategy’s aggressive Bitcoin acquisitions can be seen as a large-scale speculative attack against fiat currencies. By converting fiat into Bitcoin while it remains undervalued, the company stands to reap substantial returns if Bitcoin continues to appreciate as a global digital store of value.

Bitcoin Price Forecast: $70k Breakout Possible?

With the U.S. Fed committed to further easing and institutional players like MicroStrategy leading the charge, Bitcoin could be primed for a breakout beyond $70,000.

With bullish momentum building, Bitcoin could be on the verge of breaking $70,000. Institutional interest is ramping up, while the U.S. Fed’s dovish stance fuels optimism for further upward movement.

The Donchian Channels (DC), visible in the chart, track Bitcoin’s price range over a set period, highlighting potential breakouts. Bitcoin is currently trading within the upper band of the channel, suggesting strong buying pressure.

The upper boundary, around $64,128, acts as a key resistance level, while the lower boundary near $52,568 offers crucial support.

Meanwhile, the Fisher Transform indicator, which helps to identify trend reversals, has also flipped positive, with values above 2.04, further affirming a bullish outlook

As the blue line crosses above the orange line, it confirms the likelihood of further price increases. The Fisher Transform by converting price into a Gaussian distribution, making it highly sensitive to price changes.

In summary, a breakout above the $64,128 resistiance could potentially trigger a parabolic rally towards $70,000.  On the downside, the vital support levels are set at $58,348 and $52,568.

With institutional and retail demand growing, Bitcoin seems poised for a potential rally toward $70,000, especially if it holds above these support levels.