Is Another Bullish Rally Sustainable for Bitcoin and Other Tokens?

As Bitcoin dropped below the $29,000 pricing level on June 22, some analysts warned about a potential downward move that would leave the token trading around $20,000. A few other analysts are not convinced that this bearish sentiment will continue, but their bullish analysis is contrarian and should be assimilated with certain caveats.

A major collapse in the USD value of Bitcoin could be on the horizon. The Federal Reserve, in its latest interest rate cut proposal, calls for a further cut in the national debt, which could make it far harder to fund the debt limit.

At the moment, the Federal Reserve has yet to issue a formal statement on the monetary policy decision but it has signaled a near consensus as to what kind of impact the policy will have. According to this consensus, short term increases in the US dollar will result in a sharp decrease in the value of dollars. In contrast, the long-term dollar value will increase at a greater rate.

In the short-term, investors are already using Bitcoin to buy and sell goods and services. In the long-term, more people are starting to invest in Bitcoin, and as of June 19, more than $20 billion had been transferred via Bitcoin; however, this volume was mostly related to trading action. As a result, Bitcoin prices are on the decline, particularly if we consider that the market is attracting speculators and day traders.

There is still enough support in the market for further short term price gains but a significant crash could push bitcoin prices below $20,000 or lower in the near future. Bitcoin prices should also continue to rise as the market is still very volatile and therefore volatile enough to cause a substantial drop in prices in the short-term, and a major crash could potentially push Bitcoin prices well below $20,000 and possibly even lower down the road.

At this point, Bitcoin can do little else but stand still until the Fed uses its policy tools to lift interest rates at their next scheduled meeting on December 17. Is this a bubble? The US dollar is considered the reserve currency of the world. Bitcoin is not considered an currency; it is just an investment commodity. But that does not mean Bitcoin is not potentially risky, as it could rise or fall in value at any time.