YEREVAN (CoinChapter.com) — Bitcoin (BTC) recently rallied to $69,210, its highest level in history. Its pump followed a period of correction, and, as a result, its price was approximately $67,230 as of March 8. The question emerges then: Is this $67,000-69,000 range good enough to accumulate Bitcoin? Or, is this strategy too risky to bet on, given the huge risks associated with buying assets at their local price tops?
Grayscale Is No Fan of Buying Bitcoin At Local Tops
Analysts at Grayscale Investment, a New York-based investment management firm, argue against buying Bitcoin at its current price highs. At the core of their cautious outlook are eerie macroeconomic issues.
In its latest report, Grayscale noted that higher inflation rates could limit Bitcoin’s upside prospects despite supportive fundamentals like rising ETF inflows and halving. Excerpts:
“If inflation remains stubbornly high, Fed officials may consider delaying rate cuts until later in the year or until 2025. Generally speaking, higher US interest rates are likely to be positive for the value of the Dollar and could be negative for Bitcoin.”
The statements come after the Federal Reserve’s latest outlook on interest rates. The US central bank wants to see further progress in bringing inflation down before introducing rate cuts. As a result, CME FedWatch Tool now predicts interest rates will stay the same — at 525-550 basis-points — at least until July 2024.
As a result, Bitcoin risks extreme corrections in the coming months.
In January, the US inflation rate was 3.1%. This figure exceeded the forecast of 2.9% but was better than the previous month’s 3.4%. This result shifted expectations for a rate cut from May to June but had a limited impact on Bitcoin’s price.
A 30% BTC Price Crash Next?
Earlier in February, PlanB, the creator of the popular Bitcoin Stock-to-Flow model, indicated multiple 30% price corrections in a bull market, if history is any indication.
He noted that BTC’s price could rally for 10 months but keep on neutralizing its overbought sentiment with sharp 30% corrections.
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