Today, the price of Bitcoin returned to more than $67,000, opening the doors to a possible continuation of the upward trend, driven by a series of factors that affected the crypto-asset.
Geopolitical tensions in the Middle East, inflows of Bitcoin spot ETFs and macro data in the US fueled this week’s rally in the crypto market.
Let’s see below what it all entails and what we can expect for the future regarding the evolution of the price of digital gold.
Bitcoin price returns to $67,000 today as geopolitical tensions rise
Today, the price of Bitcoin looks to continue the bullish rally of last week with the crypto recovering to $67,000 causing potential explosive scenarios in the short term.
The crypto has strengthened its position as a “store of value” with the intensification of geopolitical tensions in the Middle East, especially the Israeli-Palestinian conflict.
Ordinarily, Bitcoin, like physical gold, serves well as a disposable P2P reserve in contexts where war threatens the primary function of a state currency.
It is noteworthy in this connection how the increase in economic uncertainties and the promotion of social unrest in Iran after the tragic incident involving the Iranian President Ebrahim Raisi and Foreign Minister Hossein Amirabdollah, who were both killed in a helicopter crash yesterday the province East died. Azerbaijan, may have contributed positively to the positive price action of Bitcoin today.
The perception of Bitcoin as a safe haven asset can lead to an increase in demand and a higher BTC price in the midst of such crises.
In a context like this, Bitcoin could soon update its historical highs if it manages to break through a significant resistance at $67,500, as noted by Markus Thielen, head of research at 10x Research.
“A break above $67,500 could potentially lead to new all-time highs.”
Last week, the cryptocurrency recorded a price increase of 7.3% and today it can continue in the same spirit, getting closer to its historical record set at $73,700.
Eyes are also on the psychological threshold of $70,000 which could fend off the bulls’ assault if not attacked with sufficient bullish momentum.
ETF inflows: a week marked by purchases for US funds
The positive price action of Bitcoin today is also and above all aided by the excellent data from the spot ETFs that emerged last week, where we observed a prevalence of inflows over outflows.
After the months of March and April marked strong outflows for funds investing in this type of investment product, with the peak of outflows on May 1 bringing losses of 570 million dollars, the situation now seems to have calmed down.
As of May 3, Bitcoin ETFs have indeed resumed accumulating BTC, causing the cryptocurrency to rebound from its local low of around $56,500.
In just 2 weeks, about $1.5 billion worth of investments have been added, pushing Bitcoin’s price action up to the current $67,000.
The funds IBIT, FBTC and ARKB, managed by BlackRock, Fidelity and Ark Invest, respectively, are leading the accumulation of cryptocurrencies while GBTC by Grayscale seems to have completed the liquidation phase, and is also starting to generate positive inflows.
In particular, the last trading day of spot ETFs saw inflows of $220 million, almost all of which were generated by the providers just mentioned.
With these numbers, the demand for ETF seems so strong that it removes more BTC from the market than is extracted by miners every day.
As Thomas Fahrer, CEO of cryptographic review portal Apollo, notes:
“This is 3 times the supply of new bitcoins from miners.”
Currently, US spot ETFs alone hold about 2.8% of the total BTC supply.
This trajectory may see an acceleration in the coming months, also considering the fact that the recent halving of the protocol halved the rewards for miners from 6.25 to 3.125 BTC per block.
Macro Data: the relationship between US inflation and the price of Bitcoin
The last factor that may have influenced the evolution of the price of Bitcoin today and in the past week concerns the macro data from the USA where a veiled optimism is looming on the horizon.
Although inflation in the United States has looked out of control until recently, the latest CPI data confirms investors’ expectations and raises the likelihood of a cut in interest rates on government bonds and a reversal of monetary policy from the FED as early as September 2024.
Indeed, according to the CME FedWatch Tool, markets assessed a 10% probability of a rate cut in June and nearly 80% in September.
This perspective, while slightly favored to risk-on assets, suggests that uncertainty is still high and that turbulence may not be over.
In any case, in such complex and uncertain situations, investors tend to seek refuge in Bitcoin as a hedge against inflation and economic instability, which positively contributes to its price increase.
At this point, as noted on X by financial commentator Tedtalksmacro, the expansion of the US M2 money supply is the lowest since the 1990s and shows that there is plenty of room for liquidity conditions to ease.
While unemployment benefits claims in the United States could provide another bout of volatility for risk assets, investors’ focus is increasingly on favorable liquidity conditions both in the United States and beyond.
These are his words:
“While liquidity has certainly returned to crypto (BTC ETF), the speed of inflows has yet to see a manic phase consistent with cycle peaks.”
The coming months could be explosively favorable for Bitcoin if US macro data supports financial markets with the injection of new liquidity.
Everything will depend on the trend of inflation of the US dollar and the labor market.
Disclaimer for Uncirculars, with a Touch of Personality:
While we love diving into the exciting world of crypto here at Uncirculars, remember that this post, and all our content, is purely for your information and exploration. Think of it as your crypto compass, pointing you in the right direction to do your own research and make informed decisions.
No legal, tax, investment, or financial advice should be inferred from these pixels. We’re not fortune tellers or stockbrokers, just passionate crypto enthusiasts sharing our knowledge.
And just like that rollercoaster ride in your favorite DeFi protocol, past performance isn’t a guarantee of future thrills. The value of crypto assets can be as unpredictable as a moon landing, so buckle up and do your due diligence before taking the plunge.
Ultimately, any crypto adventure you embark on is yours alone. We’re just happy to be your crypto companion, cheering you on from the sidelines (and maybe sharing some snacks along the way). So research, explore, and remember, with a little knowledge and a lot of curiosity, you can navigate the crypto cosmos like a pro!
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