- Bitcoin fell 22% from its all-time high but has since stabilised above the US$100k mark.
- JPMorgan analysts believe Bitcoin could reach US$170k within 6 to 12 months, citing stabilised futures markets and growing confidence despite recent ETF outflows.
- Rising gold volatility has strengthened Bitcoin’s appeal as investors seek alternative assets, supporting the long-term outlook for the crypto market.
- Others, like Ray Dalio, warn that the Fed’s shift from quantitative tightening to easing during economic strength could inflate asset bubbles and increase inflation rather than prevent downturns.
Following the crash of the crypto market a few weeks ago, Bitcoin has gone from an all-time high of US$126,198 (AU$194,847) to as low as US$98,962 (AU$152,795) – a 22% correction. Though it has stabilised now above the US$100k (AU$154.4k) mark, currently trading at US$101,496 (AU$156,708). Although some speculate that the top of the bull market is in and that bears will take over now, some analysts are not convinced.
A group of analysts working at JPMorgan, led by Nikolaos Panigirtzoglou, believe the OG crypto could soar as high as US$170k (AU$262.5k) in the next 6 to 12 months. The analysts say Bitcoin’s futures market has stabilised, with open interest ratios back to normal and steady overall investor activity despite ETF outflows.
Rising gold volatility has also boosted Bitcoin’s appeal, reinforcing growing confidence in the crypto market’s long-term prospects. Therefore, they see the fair value of BTC at US$170k, roughly a 67% increase from current levels.
The US spot Bitcoin ETFs have seen six days of net outflows, with more than US$2 billion (AU$3.1 billion) leaving the funds. Despite this, the funds still hold 6.3% (or 1.33 million BTC) of all Bitcoin, currently valued at US$135.8 billion (AU$209.6 billion).
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A Key Turning Point?
While JPMorgan analysts may believe in higher prices soon, and some even claim that the bull market hasn’t started yet, not everyone agrees. New York Times bestselling author and former hedge fund manager Ray Dalio believes trouble is brewing.
In a long-form post on Crypto Twitter, Dalio laid out how he fears the US Federal Reserve is creating dangerous conditions. Dalio argues that the Fed’s move to end quantitative tightening (QT) and begin quantitative easing (QE) – even if labelled “technical” – is a key turning point in the Big Debt Cycle.
He warns that if the Fed expands its balance sheet, cuts rates and does so while fiscal deficits stay large and markets remain strong, it could amount to monetising government debt and stimulating into a bubble rather than out of a downturn.
He goes on to explain that QE increases liquidity and pushes real interest rates lower, inflating asset prices and widening wealth gaps. Over time, this liquidity can spill into the real economy, raising inflation.
Unlike previous QE episodes, which followed crises, today’s easing would come amid high asset valuations, low unemployment, strong credit markets and moderate inflation – conditions more typical of a late-cycle bubble.
He concludes that this dynamic (fiscal and monetary stimulus during a boom) fits the pattern of a late-stage “Big Debt Cycle”, historically leading to asset bubbles, inflation risk and eventual instability. Dalio urges close monitoring of how much liquidity the Fed injects and warns that this approach could prove both inflationary and risky for markets.
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