Bitcoin’s goal of reaching the $100,000 mark by December 31 rests largely on investor responses to shifts in Federal Reserve policies and the rapidly growing debt levels of technology and AI firms.

Key insights:

• The Federal Reserve’s shift from quantitative tightening to potential interest rate cuts increases liquidity, making traditional fixed-income investments less appealing.
• Increasing credit risks in the technology sector, as highlighted by rising protection costs for Oracle’s debts, drive investors towards Bitcoin as a safer asset.

Recently, Bitcoin (BTC) experienced a dip of 4%, dropping to $88,140, which marks a 19% decline since November. As the S&P 500 hovers near its all-time highs, this growing disparity might soon close with a potential rise in Bitcoin prices, fueled by evolving central bank strategies and credit market pressures.

Given this backdrop, there’s a strong possibility for Bitcoin to breach the $100,000 threshold before the year ends.

Trends impacting Bitcoin’s potential rise:

The Federal Reserve’s transition away from quantitative tightening is a crucial driver. Starting December 1, the Fed ceased this program designed to drain liquidity from the market by allowing the maturity of Treasury securities without reinvestment.

Recent data indicates:

• A $136 billion contraction in the Fed’s balance sheet over the last six months, leading to a surge in expectations for rate cuts.
• Current bond futures are predicting an 87% chance of a rate cut during the coming Fed meeting, indicating a potential for three cuts by September 2026.

With institutional interest in scarce assets like Bitcoin intensifying, the market anticipates that rising tech credit risks will dictate capital flows, ultimately paving the way for Bitcoin to test the $100,000 level in the next few months.