Market Overview

The U.S. stock market closed on Wednesday, October 9, with all three indices rising. Futures for stocks were leaning towards a downward trend. Gold futures remained stable around $2,626/ounce, and oil prices slightly increased to $73.6/barrel.

Despite a positive day in financial markets, Bitcoin dropped to around $60,800, and most altcoins also saw declines. The overall crypto market capitalization stands at $2.225 trillion.

What Happened to Bitcoin?

On the same day, the Federal Reserve (FED) released the minutes from its recent meeting. These minutes revealed no new surprises compared to the statements made by the FED chairman after the meeting. The minutes show that officials agreed to cut interest rates by 0.5%, but there was debate on how much the cuts should be. In the end, they opted for 0.5% to balance concerns about inflation with the labor market.

Only one member of the committee, Governor Michelle Bowman, voted against the 0.5% cut, favoring a smaller 0.25% reduction. However, several other members also supported a smaller reduction. This is the first time a FED governor has dissented in a rate vote since 2005.

The minutes also noted that some members had pushed for rate cuts in July, which didn’t happen. Overall, the minutes suggest the FED is prepared to continue cutting rates, but the size of future cuts remains a subject of debate.

In China, optimism cooled following economic stimulus policies announced a few weeks ago. Key Chinese stock indices, like the CSI 300, dropped by more than 7.5% during the day. The Chinese market remains hopeful for more government stimulus, but without any new announcements, some investors took profits, causing the stock market to fall.

Will the U.S. Government Sell Bitcoin?

The U.S. Supreme Court recently declined to hear a case involving the ownership of 69,370 Bitcoin (approximately $4.38 billion), which the U.S. government seized from the Silk Road marketplace.

Battle Born Investments had requested the case, claiming it had the right to buy the seized Bitcoin through a bankruptcy asset deal. However, the judge ruled that Battle Born did not have a valid claim.

This ruling means that the U.S. Treasury could sell the seized Bitcoin if they choose. While there's no confirmation that the government plans to sell, it remains a possibility. Former President Donald Trump promised not to sell any BTC held by the U.S. Treasury if re-elected, but with the election a month away, this outcome remains uncertain.

With this ambiguity, investors fear that a large government sale of Bitcoin could drive prices lower, leading to market volatility.

Should We Worry About This?

Historically, the market has seen the U.S. government sell Bitcoin multiple times without significant long-term effects. The most recent instance involved the government moving $2 billion worth of Bitcoin without selling it. Additionally, government sales are often conducted via auctions, which generally don’t impact market prices directly. However, the market may experience short-term volatility due to investor sentiment.

Bitwise: The Roadmap to $80,000 Bitcoin

Bitwise recently released a detailed outlook on Bitcoin’s future with a report titled “Q4 Melt-Up: The Road to $80,000 and Beyond.” Bitwise also launched its Bitcoin spot ETF (BITB) alongside BlackRock and several other major players.

According to the report, three key catalysts could drive Bitcoin to $80,000 and beyond:

1. U.S. Election: Any Outcome Except a Full Democratic Victory

The U.S. election is a major event for the crypto market. While many see Trump’s re-election as a positive for crypto, and a victory for Harris as a negative, the situation within the Democratic Party is more complex.

The Democratic Party has a range of views on crypto, from staunch opponents like Senator Elizabeth Warren to strong supporters like Congressman Ritchie Torres. Over the past four years, Warren’s faction has controlled policy and agency appointments, creating a hostile environment for crypto.

Bitcoin doesn’t need politicians to flourish, but it does need them not to interfere. Unless Democrats win a full victory in both the House, Senate, and White House, Bitwise believes they will adopt a more neutral stance on the industry.

In recent speeches, Democratic leaders like Maxine Waters have begun recognizing the inevitability of crypto, signaling a shift that could support a higher Bitcoin price.

2. Economy: Two Rate Cuts + Global Stimulus Packages

The driving force behind Bitcoin’s allure is simple: the dollar will inflate. This idea birthed Bitcoin in 2008 and remains a strong motivator for the crypto industry today.

Bitcoin surged when the FED cut rates by 0.5% despite a strong U.S. economy, and it soared further when China announced a $2 trillion stimulus package in late September.

The market is now expecting another 0.5% cut from the FED before year-end and additional fiscal stimulus from China. If both happen, Bitwise predicts a strong rally in Q4. Otherwise, disappointment could weigh on the market.

3. Crypto Market Stability: No Major Negative Surprises

The final piece to achieving $80K Bitcoin is a period free of major negative surprises. No major hacks, lawsuits, or sudden releases of large Bitcoin holdings are needed to sustain market momentum.

Crypto history is filled with such shocks, but if we can avoid them through the end of the year, Bitwise expects a new all-time high for Bitcoin.

Can Altcoins Help?

Bitwise also mentioned that while Bitcoin doesn’t need altcoins to thrive, a broad rally across the crypto market would enhance Bitcoin’s short-term growth prospects.

Past market cycles have shown that positive sentiment in sectors like DeFi or stablecoins can boost Bitcoin’s upward trajectory.

Conclusion

Bitcoin has had a strong year, up 49% so far, and major positive news continues to pour in, including the launch of Bitcoin ETFs and institutional adoption.

According to Bitwise, the outlook for Bitcoin reaching $80,000 by next year looks positive, but achieving it before year-end will require the three catalysts outlined above.

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