4 Factors That Could Drive Bitcoin’s Price to $90K in April
Key points: Monetary stimulus in China and Europe increases investors’ focus on Bitcoin price. The US Federal Reserve is under political pressure to cut rates, as the DXY weakens. Bitcoin’s decoupling from traditional markets continues to gain attention.
Bitcoin (BTC) traders are somewhat puzzled by BTC price jumping to $85,000, especially since the S&P 500 index has dropped 5.7% in April. This move followed a 14% rebound after a trade-war-induced crash to $74,400. While investors remain cautiously optimistic, several indicators suggest potential gains above $90,000.
Multiple metrics support a “decoupling” phenomenon where Bitcoin’s price movement is not closely tethered to traditional financial instruments. However, skepticism remains as BTC has not matched gold’s performance. Gold reached an all-time high of $3,358 on April 16, prompting speculation about increasing gold reserves held by governments and central banks.
Global stimulus rises as the US economy shows early weakness. As central banks respond to recession threats, the likelihood of monetary supply increases. While the US Federal Reserve (Fed) has refrained from lowering interest rates or expanding its balance sheet, other nations have already acted. This development places additional strain on the US economy, which is beginning to exhibit signs of weakness.
In China, new bank loans in March rebounded unexpectedly to $500 billion, exceeding analysts’ projections by more than 20% and showcasing a robust recovery from previous declines. Reports suggest that the PBOC is set to implement further stimulus measures to mitigate the effects of the trade war with the United States.
On April 17, the European Central Bank cut interest rates for the seventh time this year to bolster the eurozone economy, setting capital costs at their lowest since late 2022. Several investment banks have also lowered their inflation forecasts for the region, as the tariff conflict may decrease the region’s gross domestic product by 0.5%.
Weaker US dollar and Bitcoin miners’ long-term commitment. The weakening of the US dollar against major global currencies adds pressure on the US Federal Reserve to adjust its monetary policy, with the DXY Index hitting its lowest level in three years. A weaker dollar generally supports exports, potentially benefiting the current account balance, but its impact could be short-lived amid ongoing trade disputes.
Investor confidence has been affected by public discontent directed at Fed Chair Jerome Powell from prominent political figures, complicating the US Treasury’s reliance on issuing Treasuries, further undermining the US dollar.
Despite these circumstances, macroeconomic data does not currently favor a more lenient monetary policy from the US Fed, particularly after the latest jobless claims report on April 17 indicated a decrease of 9,000 claims to 215,000 for the week ending April 12. Powell emphasized on April 16 that the labor market remains in a “solid condition.”
Bitcoin miners have displayed strong long-term commitments as indicated by an 8% increase in hashrate compared to the previous month. Following the Bitcoin halving in April 2024, there were initial concerns that lower profits could lead to miner exits and a potential sell-off, given that miners reportedly hold nearly 1.8 million BTC.
This article is for general information purposes and is not intended to be taken as legal or investment advice. The views, thoughts, and opinions expressed here are solely those of the author and do not necessarily represent those of Hotnchill.
