- The diving yen presents Bitcoin traders with an opportunity, one investor says.
- However, itâs not the only factor driving crypto prices post-halving.
- Traders expect a strong rally later this year.
Crypto observers expect the Bitcoin halving to translate into a surge for the worldâs biggest cryptocurrency.
However, two weeks after the event, Bitcoin is still trembling around $62,000. The event cut the rewards for miners by half, reducing the supply of new Bitcoin hitting the market by 50%.
Now, investors look to the plunging yen, the Federal Reserve and other macroeconomic factors to drive the price.
The diving yen
The Japanese yen dropped to its lowest level against the US dollar since 1990 on Monday morning before sharply reversing to levels held last week.
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It is down 10% against the dollar since the start of the year.
Neil Wilson, an analyst at Markets.com, said the dramatic currency move wasnât a natural market event, but he guessed that the Bank of Japan may have jumped in.
âThis has the look and feel of intervention,â he said in a note to clients.
One investor suggests the falling yen presents Bitcoin traders with an opportunity.
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âThe Japanese yen looks absolutely tragic right here,â Cory Klippsten, CEO of Bitcoin financial services firm Swan.com, tweeted. âMight want to sell yen for Bitcoin, just in case it catches on.â
Interest rates
Meanwhile, crypto traders are bracing for Wednesdayâs meeting of the Federal Open Market Committee, a government branch that dictates US monetary policy.
âWe probably wonât see any rate cuts in the US this yearâ
â  Alberto Matellán
The committee will determine whether or not to cut interest rates, which could affect investor sentiment on riskier assets like Bitcoin.
However, the chances of cuts are dwindling.
âWe probably wonât see any rate cuts in the US this year,â Alberto Matellán, chief economist at securities company Mapfre Inversion, told DL News.
Options traders are currently pricing in no change to the Fedâs Funds rate at 5.25% to 5.5%, according to CMEâs FedWatch Tool.
It comes as Federal Reserve Chair Jerome Powell walked back previous statements last month, suggesting the central bank would start to cut rates this year.
Powell argued the strength of the US labour market and progress on inflation suggest the Fed should keep interest rates elevated.
Investors are also considering non-US factors.
Those include concerns over ongoing tensions in the Middle East and Chinaâs handling of its real estate crisis.
Mt. Gox
Defunct crypto exchange Mt. Gox is another bearish factor to consider.
After a decade of waiting, creditors look likely to get back their assets which were locked up in the exchangeâs collapse.
They are expecting to be paid back by an October 31 deadline â the final date for repayment.
The amount they are owed amounts to almost $9.2 billion worth of Bitcoin.
Thatâs a lot of Bitcoin which could flood the market if creditors decide to immediately sell their assets, potentially nullifying the effects of the halving, which will reduce the amount of new Bitcoin hitting the market by roughly $5.3 billion over the same period.
If supply goes up, prices go down, according to general market theory.
Bullish sentiment
Despite several factors weighing on investor sentiment, traders and analysts expect Bitcoin to rally to new heights over the next few months.
Traders are bullish the price will rise later in the year, a K33 Research report found earlier in April.
Data from market maker Wintermute backs that up, suggesting traders are piling into bullish bets Bitcoin will reach $100,000 in September.
Crypto market movers
- Bitcoin fell 1.6% over the past 24 hours to trade at $62,500.
- Ethereum is down 3.3% to $3,180.
What weâre reading
Sebastian Sinclair is a markets correspondent for DL News. Have a tip? Contact Seb at sebastian@dlnews.com.