Bitcoin (BTC) Insights: 4 Key Factors Driving the Potential for a $120K Price Rally

Numerous analysts have consistently identified $120,000 as the price target for bitcoin this year. Recent developments have bolstered this optimistic outlook, driven by four primary factors: the spot price, central bank policies, trends in the energy market, and technical configurations.

Let’s delve into these factors in more detail.

BTC’s Affection for $100K

A crypto trader recently highlighted that the most effective marketing for any asset is its price, echoing a concept similar to George Soros’ reflexivity theory. Soros described how market perceptions and prices create a feedback loop—higher prices attract more buyers, which then pushes prices even higher, often exceeding fundamental expectations.

In this framework, bitcoin’s durability, characterized by its price predominantly staying above $100,000 despite the Iran-Israel conflict and the U.S. airstrike on Iran, stands out as its most compelling attribute.

This endurance reflects inherent strength, potentially reassuring current holders while enticing new investors, which could trigger the next upward movement in prices. Additionally, the brief dips below $100,000 observed in the last 48 hours revealed a strong “buy the dip” mentality among investors.

“We are observing exchange outflows, indicating that individuals, whether retail or institutional, are seizing the opportunity to buy the dip. Typically, when external factors like war disrupt the market, significant short-term dips occur, but they tend to rebound depending on the situation’s severity and communication. Thus far, it seems we’re witnessing a similar pattern,” Nicolai Soendergaard, a research analyst at Nansen, stated in an email to CoinDesk on Monday.

Concurrently, data from Glassnode indicates that weak-handed investors started selling on June 10, while stronger hands engaged in buying opportunities.

“Since June 10, the number of BTC investors classified as Loss Sellers has surged by 29% (from $74K to $95.6K), highlighting growing pressure on weaker holders. However, Conviction Buyers have also increased, suggesting that sentiment isn’t collapsing. Some are cutting their losses while others aim to lower their cost basis,” Glassnode reported on X.

Trump Appears to Have Found His Doves

Liquidity easing, through measures like Fed rate cuts, generally favors stocks and cryptocurrencies. Some Fed officials are starting to consider a potential rate cut in July, which contrasts with Chairman Jerome Powell’s data-dependent approach.

“Trump seems to have found his doves,” ForexLive’s Chief Currency Analyst and Managing Editor, Adam Button noted on Monday following comments from Federal Reserve Governor Michelle Bowman, a hawk, suggesting the central bank should cut rates in July.

Hawks advocate for tighter monetary policies and elevated rates to control inflation, whereas doves prefer lower rates to encourage growth.

Bowman indicated that the effects of tariffs on inflation might take longer to materialize and could be less significant than initially anticipated, expressing her support for a potential rate cut next month, assuming inflation pressures remain mild.

Fed Governor Christopher Waller voiced a similar sentiment on Friday, advocating for a July rate cut.

“It might just be a coincidence that two former hawks who are Republicans have suddenly shifted to doves, but it’s starting to resemble a MAGA takeover of the Fed. One thing [President Donald] Trump has been consistent on throughout his career (and it may only be one thing) is his preference for low interest rates,” Button remarked.

Chairman Powell’s semiannual testimony on monetary policy to Congress is expected on Tuesday, where he is likely to reaffirm the Fed’s independence and data-driven approach while possibly facing criticism from Republicans regarding the current elevated rates.

Oil Price Decline

For the first time, the consensus on crude oil has proven to be significantly off mark. On Sunday, prevailing opinions suggested that U.S. military actions against Iran and Tehran’s potential blockage of the Strait of Hormuz would drive oil prices up.

However, on Monday, oil prices plummeted on both sides of the Atlantic. This drop is advantageous for central banks anxious about the second-order effects stemming from last week’s oil price surge, as well as those anticipating rate cuts.

Second-order effects generally encompass increased transportation costs, higher prices for goods reliant on oil, and wage pressures, all of which contribute to a rise in overall inflation.

“So much for the anticipated second-order effects of oil that Central Bankers warned about. Crude oil has decreased by 6.5% today and 15.41% year-over-year… that’s deflation,” James E. Thorne, chief market strategist at Wellington Atlus, commented on X.

Bullish Technical Configuration

Momentum indicators, particularly the key moving averages, are once again showing a bullish alignment.

The 100-day simple moving average (SMA) has recently crossed above the 200-day SMA, following weeks where the 50- and 200-day SMAs generated a bullish golden crossover.

This results in the three widely-monitored averages stacking favorably in a classic upward-sloping bullish momentum formation—similar to a configuration observed in November of last year, which sustained through the entire rally from $70,000 to $100,000.

Bitcoin’s daily chart. (TradingView/CoinDesk)

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