- Elja predicts Bitcoin value drop due to Federal Reserve’s BTFP ending.
- No expected Federal Reserve interest rate cuts, reducing cryptocurrency appeal.
- Decline in crypto ETF investments signals waning institutional interest.
Elja, a crypto investor who has been recognized in the Forbes 40 Under 40 list, posted on Twitter detailing various elements that might decrease the value of Bitcoin
Elja identified the end of the Federal Reserve’s Bank Term Funding Program (BTFP) as a potential factor that might decrease liquidity in the cryptocurrency market. The BTFP, which was created in 2023 as a reaction to bank collapses, will no longer extend new loans, potentially hampering the free circulation of money.
Furthermore, Elja observed that there is little anticipation for a reduction in the Federal Reserve’s interest rates by June. Given the latest inflation figures and statements from Fed Chair Jerome Powell, it appears that interest rates may stay the same or even rise, which could lessen the appeal of high-risk investments such as cryptocurrencies.
Elja also pointed to a decline in the amount of money flowing into cryptocurrency exchange-traded funds (ETFs) as a sign that institutional interest in the market may be waning. Elja suggested that the ongoing tensions between Iran and Israel add another element of unpredictability that might adversely affect the cryptocurrency markets.
Despite these negative indicators, the analyst maintains a positive long-term view on Bitcoin and other cryptocurrencies. He expects that there might be a period of horizontal price movement in the near term. In his words,
I’m not negative on BTC and crypto, but I wouldn’t be opposed to a few months of horizontal trading after seven straight months of movement.
In conclusion, Elja pointed out that historically, Bitcoin tends to underperform in the second and third quarters of the year. The forthcoming Bitcoin halving event, which will make mining more difficult and expensive, could force miners to sell their Bitcoin to stay in business.
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