Crypto analysts expect Bitcoin to soar to US$100,000, even if the Federal Open Market Committee (FOMC) keeps interest rates unchanged at its meeting this week, based on strong institutional buying of spot Bitcoin exchange-traded funds (ETFs).
The FOMC interest rate decision this week could define the outlook for risk-on assets, including cryptocurrencies. Bitcoin, the world’s most traded cryptocurrency, rose 2.2% to $96,446 on Wednesday on higher risk appetite after the US and China said some trade dialogue is slated for later this week.
Woramet Chansen, an investment advisor at Merkle Capital, said most investors expect the Fed to keep interest rates unchanged.
A rate cut would be positive for investment in risk assets, including cryptocurrencies, said Mr Woramet.
The Arizona legislature in the US recently approved two Republican-led bills that would allow the state to invest up to 10% of its public funds, potentially more than $3 billion, into digital assets such as Bitcoin.
If the bills are signed into law, Arizona would become the first US state to establish a state-level Bitcoin reserve, aligning with US President Donald Trump’s proposal for a national “strategic crypto reserve”.
The move to adopt Bitcoin as a reserve asset by Arizona attracted increased institutional investment into spot Bitcoin ETFs, driving prices higher.
“Even if the Fed does not cut interest rates this time, there is still a chance the price of Bitcoin will continue rising towards the $100,000 target in the third quarter. Economists still expect the Fed to cut interest rates 3-4 times this year,” said Mr Woramet.
He said there are two key risk factors to watch, including a potential US recession, which can be tracked through employment data and GDP growth figures.
Another factor is the outcome of Trump’s tax policy after the 90-day grace period ends because these tariffs would disrupt global markets, said Mr Woramet.
Peerapat Hankongkaew, chief investment officer at Cryptomind Advisory Co Ltd, said another critical issue is the upcoming large-scale rollover of US Treasury debts in June.
If the government can successfully roll over a large portion of the debt, it would help keep the economy running smoothly, he said. However, if the rollover is limited or if defaults increase, it would signal a contraction in market liquidity, said Mr Peerapat.
“Meanwhile, traders are becoming less confident that the Fed will ease monetary policy,” he said.
While this might seem bearish for risk assets, it could prompt the US Treasury to inject liquidity into the markets to maintain fiscal support and government spending, said Mr Peerapat.