Central Bank Policies Support Bitcoin’s $100,000 Level, Says Expert

Bitcoin maintains the psychological threshold of $100,000, buoyed by investors’ high risk appetite, which is fuelled by central banks’ monetary easing. This view was expressed by Jag Kuner, head of derivatives at Bitfinex, in a conversation with The Block.

“The ECB and the People’s Bank of China (PBOC) recently cut rates for the first time in 14 years. A rate cut by the Fed could improve liquidity conditions globally,” the expert noted. “This easing could stimulate capital inflow into risk markets, including cryptocurrency.”

The ECB reduced interest rates by 25 basis points following its meeting on December 12. Meanwhile, the regulator is not yet ready to declare victory over inflation, stated Christine Lagarde, head of the monetary institution.

The key rate determines the cost of money for banks and, consequently, the cost of loans for businesses and individuals.

Speculation is growing regarding the prospects of further monetary policy easing by the PBOC. Some Wall Street players, such as Goldman Sachs and Morgan Stanley, anticipate further rate cuts in 2025—amounting to a total of 40 basis points.

What about the Fed’s rate?

Many market participants are awaiting the Fed’s key rate decision—the FOMC meeting is scheduled for December 18.

Kuner noted that the high likelihood of a 25 basis point cut, along with stimulus measures in the EU and China, has bolstered optimism in risk asset markets, including cryptocurrencies. This, in turn, could contribute to a “Santa rally,” pushing Bitcoin and other coins higher.

According to the specialist, the likelihood of a bull run resuming has increased following the recent cascade of liquidations in derivatives markets.

“Now that over-leveraged longs have been removed from the markets, the foundation is set for the next phase, which will begin in the coming weeks,” concluded the expert.

At the time of writing, Bitcoin is trading around $101,580. The dominance index of the first cryptocurrency is 52.9%.

In November, annual inflation in the US was 2.7%, aligning with market expectations.

Earlier, specialists at Matrixport identified a favourable macroeconomic environment as one of the factors for the first cryptocurrency’s rise to $160,000 by 2025.