Bitcoin Could Hit $100,000 This Year Amid Cooling US Inflation

Several tailwinds are aligning to potentially push Bitcoin to the $100,000 mark by the end of the year. This optimistic outlook comes as US inflation shows signs of cooling, creating a favorable environment for risk assets like Bitcoin.

• Cooling Inflation: The US Consumer Price Index (CPI) fell by 0.1% in June, marking the first decrease since May 2020.
• Federal Reserve Rate Cuts: Traders anticipate a high likelihood of rate cuts by the Federal Reserve, possibly as early as September.
• Bitcoin ETFs: Spot Bitcoin ETFs have garnered significant inflows and are expected to attract more investment once approved by major wealth management platforms.
• Post-Halving Supply Shortages: Bitcoin’s supply continues to shrink post-halving, increasing its scarcity and value.
• Shifting Political Landscape: Changes in Washington could provide additional support for the crypto market.

Cooling Inflation and Its Impact

The US Bureau of Labor Statistics reported a 0.1% decrease in the Consumer Price Index (CPI) for June, following a flat performance in May. This marks the first decline in the index since May 2020. The cooling inflation could bolster the Federal Reserve’s resolve to begin cutting rates this year, benefiting risk assets like Bitcoin.

Federal Reserve Rate Cuts

According to the CME FedWatch Tool, traders are anticipating an 84.6% chance that the Federal Reserve will cut rates as early as September. Rate cuts generally make risk assets more attractive, and Bitcoin could see a significant boost as a result.

Bitcoin ETFs and Inflows

Since their launch in January, spot Bitcoin ETFs have garnered approximately $15 billion in net new assets. However, these ETFs are still awaiting approval for use by large wealth management platforms such as Morgan Stanley and Wells Fargo. Once approved, these platforms are expected to bring in billions more in investment.

Post-Halving Supply Shortages

Bitcoin’s supply continues to shrink following its halving event, which reduces the reward for mining new blocks. This scarcity is expected to drive up the value of Bitcoin, as miners are forced to capitulate due to the increased difficulty of mining the asset.

Shifting Political Landscape

Changes in the political landscape in Washington could also provide a reprieve from falling crypto prices. A more favorable regulatory environment could attract more institutional investors to the crypto market.

While short-term news may appear bleak, the long-term outlook for Bitcoin is promising. With cooling inflation, potential Federal Reserve rate cuts, significant inflows into Bitcoin ETFs, post-halving supply shortages, and a shifting political landscape, Bitcoin could very well reach the $100,000 mark by the end of the year.