Key Insights:
- Wall Street firms revise down their Bitcoin price prediction.
- Bitcoin’s contrarian outcome after BOJ raises rates.Priced in or fake-out?
- Bitcoin exchange reserves regain downward trajectory after a slight uptick from 11 to 18 December.
A major macroeconomic dynamic has undergone a major shift, with the BOJ raising rates just days after the U.S lowered rates. Analysts expect these changes to influence the investment landscape, especially for risk assets such as stocks and crypto, and it may already be happening.
Institutional investors have already begun adjusting their Bitcoin price prediction to account for the recent economic changes.
Recent reports revealed that Cathy Woods dropped her 2030 Bitcoin price prediction from $1.5 million to $1.2 million. Standard Chartered previously predicted that Bitcoin would rally to $300,000 in 2026, but the bank has lowered that prediction by half to $150,000.
Citi reportedly slashed its 12-month Bitcoin price prediction from $181,000 to $143,000. This suggests the banks are less optimistic about Bitcoin’s long-term prospects based on macro liquidity conditions. Especially after the BOJ’s rate hike announcement this week.
Bitcoin Price Prediction Remain Bullish
The overall market prediction was that the BOJ would announce a rate hike. The Japanese central bank confirmed this on Friday, revealing it was raising rates by 25 basis points.
Interestingly, the Bitcoin USD price chart experienced a rally on the same day that the BOJ announced the rate hike. A contrary outcome to the expected downside.
BTC price traded above $88,000 at press time after recovering from below the $86,000 price tag on Thursday.
The uptick aligned with the idea that the Bitcoin price downside in the last few months priced in the BOJ’s policy change. Some believe that the slight uptick on Friday suggests that some investors bought back after the dip.
On the other hand, this could signal that the market might be faking an uptrend before it extends its downside. One thing was for sure. The actual event did not have much of a negative impact, but the rate hike could still lead to the Yen carry trade unwind.
But if the BOJ’s rate cut was priced in, then Bitcoin might have an easier time recovering. The banks may have just revised their Bitcoin price prediction, but their predictions remained positive, though lower, likely due to the liquidity impact.
Bitcoin Exchange Reserves Revert to the Downside
Bitcoin exchange reserves may offer a snapshot of the current market sentiment. The amount of BTC on exchanges surged considerably between 11 December and 18 December.
This meant that investors moved their BTC to exchanges in anticipation of a BOJ-induced downside.
Interestingly, Bitcoin exchange outflows surged in the last 2 days. This suggests growing conviction that the downside risk may have passed for now.
A glance at whale activity revealed a mixed bag of reactions, suggesting a lack of consensus on whether the bearish trend was over. This uncertainty was also backed by expectations that the BOJ’s rate cut would undermine recovery attempts.
In other words, there was still significant uncertainty around BTC’s prospects in early 2021. Especially now that major institutional investors have revised down their Bitcoin price predictions.
The slight weekend rally might be a calm before the storm. Bitcoin could still risk downside given the heightened uncertainty now that the BOJ has raised rates. On the other hand, the already discounted price may continue to attract investors.
Bitcoin institutional activity in the coming days may shed more light on BTC’s next move. If
BTC ETFs embark on aggressive buys, then this could signal more recovery ahead. A contrary outcome may set the backdrop for more bearish price action.