Analyst Predicts Bitcoin Hitting $45K by Year's End

• Bitcoin Predicted to Hit $40,000 - $45,000 by Year's End
• Bitcoin's Bullish Momentum
• Increase in Demand for Call Options
• Options Expiries and Open Interest
• Declining U.S. Inflation Rate and Potential Rate Cuts
• Spot ETF Optimism Supports Price Gains

Bitcoin Predicted to Hit $40,000 - $45,000 by Year's End

DeFi Research predicts that Bitcoin$42,260 -0.64%'s value may rise to $40,000, or possibly even $45,000, by the end of the year. This forecast is based on the expected flows of the options market and the Federal Reserve's (Fed) dovish expectations, which should push the cryptocurrency's value higher.

Bitcoin's Bullish Momentum

Bitcoin's bullish momentum is predicted to continue throughout the end of the year, with the cryptocurrency's value likely reaching the $40,000 mark. This information comes from Markus Thielen, the head of research at crypto services provider Matrixport and the founder of the analytics portal, DeFi Research. Mr. Thielen suggests that the cryptocurrency's increasing value this year, which has seen nearly a 40% rise in the past four weeks alone, is due to positioning in the options market and dovish expectations from the Fed.

Increase in Demand for Call Options

Thielen suggests that the rising value of Bitcoin has led to an increased demand for call options or derivatives. This increase has left some market participants, especially market makers, exposed to continued rises in the cryptocurrency's value. As a result, these market participants are likely to purchase Bitcoin and hedge themselves as the cryptocurrency's value increases.

Options Expiries and Open Interest

Thielen points out that November 24th and December 29th are expected to have significant options expiries with $3.7 billion and $5.4 billion in open interest, respectively. In addition, about 85% more calls than puts are currently outstanding, with the most significant open interest being at the 40,000 strike. This means that as the value of Bitcoin gets closer to $40,000, more people will need to purchase Bitcoin to hedge themselves.

Declining U.S. Inflation Rate and Potential Rate Cuts

Another factor supporting Bitcoin's continued rise is the decreasing U.S. inflation rate and the hope for rate cuts or liquidity easing by the Fed. The U.S. inflation rate has been slowing down in recent months, which makes rate cuts or easing of liquidity more likely. Thielen predicts that the inflation rate, as measured by the consumer price index (CPI), will drop below the Fed's 2% target in 2024.

Spot ETF Optimism Supports Price Gains

According to Bloomberg's analysts, there is a 90% chance the SEC will approve one or more spot ETFs before Jan. 10, which could continue to support Bitcoin's price gains.

Edited by Jonathan Stoker