Bitcoin (BTC) recorded a 5.9% gain between June 2 and 5, but its rally was halted at 71,746.
Bitcoin (BTC) saw a 5.9% gain between June 2 and 5, but its rally was halted at $71,746. The move was supported by nearly $1 billion in inflows into US-listed Bitcoin exchange-traded funds, indicating strong demand from institutional investors.
Bitcoin’s bullish momentum was also fueled by the significant growth in unrealized losses in the US banking sector. However, despite favorable conditions, including a more favorable stance from US lawmakers towards cryptocurrencies, Bitcoin was unable to rise above $72,000.
Regulatory uncertainty persists despite positive developments
According to Matt Hogan, chief investment officer at Bitwise, regulatory uncertainty has prevented financial advisors from increasing their exposure to cryptocurrencies. However, Hogan believes the United States is moving toward clearer regulation, a shift that began when Democrats voted to repeal SEC Staff Accounting Bulletin 121.
The SEC’s approval of spot Ethereum ETFs is another sign that U.S. regulators are less inclined to tackle anti-crypto litigation after multiple court losses, including the conversion of Grayscale’s GBTC Trust into a regular ETF. However, Bitwise’s Hogan points out that US President Joe Biden’s veto of SAB 121 shows that “cryptocurrencies still have a long way to go.”
According to a report from the Federal Deposit Insurance Corporation (FDIC), U.S. financial institutions are currently suffering $517 billion in accounting losses due to the impact of rising interest rates on their residential mortgage-backed securities. The report, published on May 29, indicates that 64 banks were on the verge of bankruptcy in the first quarter of 2024.
Bitcoin Price Could Fall Ahead of Negative Macroeconomic Events
Arthur Hayes, co-founder of BitMEX, said the most likely solution would be to “print more money,” which is exceptionally appropriate for scarce assets like Bitcoin. According to Hayes, Bitcoin’s 43% 30-day rise that began in March 2023 was caused by the collapse of Silicon Valley Bank and Silvergate Bank. A similar trend could repeat itself in 2024.
However, even if this theory is correct, that is, the US Federal Reserve will inject liquidity into the system to avoid a general bankruptcy or relieve pressure on the banking system through repurchase agreements and lines special credits, there is a good chance that the price of Bitcoin will fall first if… Stock markets and bond markets suffer.
Before the rally began in March 2023, Bitcoin price fell to $19,559, its lowest level in almost two months. At the time, the move reflected the same uncertainty that pushed two-year U.S. Treasury yields from 5.07% to 3.98%, which is highly unusual and suggests traders were willing to lower their yields to ensure they hold government-backed assets. .
Thus, investors can expect a price correction before Bitcoin eventually rises, although there is no guarantee that the 2023 trend will repeat itself, especially with the excellent track record of recurring inflows from American Bitcoin spot ETFs, which have accumulated more than 52 billion… dollars. Since its launch in January.
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Stock market success is not intrinsically positive for Bitcoin
Also worth considering is the stellar performance of US-listed tech stocks, notably Nvidia (NVDA), which helped the S&P 500 reach an all-time intraday high of 5,342 points on June 5. UBS analysts expect the Fed to cut interest rates twice. this year, creating a “healthy backdrop for stocks,” as CNBC reported.
Even if you’re not competing for the same price as Bitcoin, strong stock market performance reduces incentives to invest in alternative assets. GameStop’s (GME) 32% rally since the start of the week, sparked by influencers and social media posts showing “Roaring Kitty” gains exceeding $85 million, could also negatively impact the stock. traders’ interest in cryptocurrencies.
In short, there is nothing stopping Bitcoin from hitting a new all-time high in 2024. However, as long as investors remain comfortable with fixed income and stock market traders, there is less incentive to exceed the $71,000 in the short term.
This article is intended for general information purposes and is not intended and should not be relied upon as legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
