Bitcoin's Bullish Prospects: Fed Cuts, Strategic Reserve And A 2020 Deja-Vu

Industry researcher and DeFi Report founder Michael Nadeau presented his case for optimism in light of the recent market correction.

What Happened: The researcher noted that after experiencing significant pullbacks — Bitcoin BTC/USD down 33%, Ethereum ETH/USD 38%, and Solana SOL/USD a steep 45% — there's growing evidence that the market is setting the stage for its next upward movement.

The most notable shift comes from the re-setting of funding rates and the liquidation of major supply overhangs, including sales by the German government and the unwinding of positions from entities like Mt. Gox and FTX creditors.

Long-term holders are reportedly re-entering the market and the price remains above the critical 200-week moving average. Even miner capitulation, often a bearish signal, appears to be slowing down.

Also Read: Bitcoin’s Line In The Sand Is $60K, But Careful With Ethereum And Solana, Says Top Technical Analyst

Why It Matters: The researcher noted that market sentiment has flipped to fear, particularly toward altcoins like Ethereum, mirroring the situation from late 2020, right before Bitcoin’s explosive rally. This was spurred by institutional interest from figures like Paul Tudor Jones and Michael Saylor.

In the broader economic context, the Federal reserve is anticipated to cut rates as unemployment rises and inflation cools, further enhancing the macro environment for crypto. Meanwhile, geopolitical factors, such as Trump's support for a strategic Bitcoin reserve, are forcing global actors to take digital assets seriously.

With major wealth managers now offering Bitcoin and Ethereum ETFs, the market is attracting fresh capital. Given these factors, the current setup feels reminiscent of the pre-bull run conditions in late 2020, the researcher concludes.

What’s Next: The influence of Bitcoin as an institutional asset class is expected to be thoroughly explored at Benzinga’s upcoming Future of Digital Assets event on Nov. 19.

Read Next:

• Why Bitcoin’s Price Action Is Concerning And ‘Capital Preservation’ Key

This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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