Bithumb Economic Research Institute "Bitcoin to Bottom Out by Year-End... Preparing for Rise"

Inversion of US Treasury Yield Curve Signals End of Rate Hikes Within 6 Months
Year-End Tightening Cycle Nears End... Bitcoin Prices to Bottom Out in Second Half

[Asia Economy Reporter Myunghwan Lee] There is a forecast that Bitcoin prices will hit the bottom by the end of this year and then start to rise.

The Bithumb Economic Research Institute, affiliated with the virtual asset exchange Bithumb, analyzed in its report titled "Concerns about Economic Recession and the Relationship with Bitcoin Prices," released on the 18th, that "As the year-end approaches, expectations for the end of interest rate hikes will have a positive effect on Bitcoin prices bottoming out and entering an upward phase." They cited the historical fact that when the US short- and long-term interest rate inversion occurred, interest rate hikes ended within six months.

Bitcoin prices plunged to the $17,000 range in mid-June but have partially recovered and are moving within the $20,000 box range. The institute explained that as interest rate hikes approach their final stages by the end of the year, expectations for the end of the tightening cycle will also emerge. However, due to the sharp interest rate hikes by the US Federal Reserve (Fed) and the strong dollar in the second half of this year, liquidity has shrunk, which may cause additional adjustments in Bitcoin prices.

The institute predicted that consumption contraction, slowing employment recovery momentum, the resurgence of COVID-19 variants, and economic contraction in Europe will be the background for future monetary easing. Along with this, as expectations for a baby-step interest rate cut by the Fed in the first quarter of next year form toward the end of the year, Bitcoin prices are expected to enter a phase of bottoming out in the second half of this year.

The Bithumb Economic Research Institute pointed out that when an inversion of short- and long-term interest rates occurs, in most cases, interest rate hikes ended within six months. They also analyzed that on average, eight months after the last rate hike, the cycle switched to rate cuts. Based on this, they predicted that Bitcoin prices will stabilize toward the latter half of this year.

Lee Miseon, Head of the Research Center at Bithumb Economic Research Institute, forecasted, "Considering the possibility of Fed rate cuts in the first half of next year, the scheduled Bitcoin halving in the first half of 2024, and deleveraging in the DeFi market, Bitcoin prices will bottom out in the second half of this year."