back to top
Thursday, June 6, 2024
HomeCrypto3 reasons to keep Bitcoin below $72,000

3 reasons to keep Bitcoin below $72,000

Bitcoin (BTC) recorded a 5.9% increase from June 2 to 5, but the rally stalled at $71,746. This movement was supported by nearly $1 billion inflows into U.S. spot Bitcoin ETFs, indicating strong demand from institutional investors.

Bitcoin’s bullish momentum is also driven by a significant increase in unrealized losses by the US banking industry. However, despite favorable conditions, including a more crypto-friendly stance from US lawmakers, Bitcoin has not been able to surpass $72,000.

BTC/USDT Daily Chart | Source: TradingView

Regulatory uncertainty persists despite positive developments

According to Matt Hougan, chief investment officer at Bitwise, regulatory uncertainty has hindered financial advisors from increasing their exposure to cryptocurrencies. However, Hougan believes the US is moving toward regulatory clarity, a shift that began when Democrats voted to repeal the U.S. Securities and Exchange Commission’s Special Accounting Provisions (SAB 121). States (SEC).

The SEC’s approval of spot Ethereum ETFs is another sign that U.S. regulators want to avoid disputes against cryptocurrencies after multiple losses, including the conversion of the U.S. GBTC Trust. Grayscale into a regular ETF. However, Bitwise’s Hougan noted that US President Joe Biden’s veto of rescinding SAB 121 shows that “crypto still has a long way to go.”

According to a report by the Federal Deposit Insurance Corporation (FDIC), U.S. financial institutions are currently saddled with $517 billion in accounting losses due to the impact of higher interest rates on hedged securities. by mortgaging their home. The report, published on May 29, said 64 banks were on the brink of bankruptcy in the first quarter of 2024.

Bitcoin price may decrease in response to negative macroeconomic events

BitMEX co-founder Arthur Hayes thinks the most likely solution is to “print more money,” which is especially beneficial for scarce assets like Bitcoin. According to Hayes, Bitcoin’s 43% rally in the 30 days starting March 2023 was triggered by the collapse of Silicon Valley Bank and Silvergate Bank. A similar pattern could play out in 2024.

However, even if this theory is correct, it means that the US Federal Reserve will inject liquidity into the system to avoid a general bankruptcy or reduce pressure on the banking system through repurchase agreements and particular lines of credit, it is likely that Bitcoin’s initial reaction is to decline if stock and bond markets experience difficulties.

Before the start of the March 2023 bull run, Bitcoin price fell to $19,559, its lowest in nearly two months. At the time, this movement reflected the same uncertainty that moved the two-year US Treasury yield from 5.07% to 3.98%, which was extremely unusual and shows that traders are willing to reduce yields to get their hands on government-backed assets.

As a result, investors may be expecting a price correction before the Bitcoin bull run takes place, although there is no guarantee that the 2023 fractal will repeat, especially since Bitcoin ETFs trade America’s instant has accumulated more than $52 billion since its launch in January.

A boom in the stock market is not necessarily positive for Bitcoin

It’s also worth considering the outperformance of U.S.-listed tech stocks, including NVidia (NVDA), which helped the S&P 500 index reach an intraday high of 5,342 on June 5. Analysts from UBS expects the Fed to cut interest rates twice this year, creating a “healthy backdrop for stocks,” as reported by CNBC.

Even without competing directly with Bitcoin, the strong performance of the stock market reduces the momentum for alternative assets. GameStop’s (GME) 32% surge this week, fueled by influencers and social media posts showcasing ‘Roaring Kitty’s $85 million-surpassing profits, could also weigh on prices. increase traders’ interest in cryptocurrencies.

In short, there is nothing stopping Bitcoin from reaching a new all-time high in 2024. However, as long as investors are comfortable with fixed income and trading in the stock market, there will be little incentive to push Bitcoin price above $72,000 in the short term.

You can see coin prices here.

Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.


According to Cointelegraph

Mark Tyson
Mark Tyson
Freelance News Writer. Always interested in the way in which technology can change people's lives, and that is why I also advise individuals and companies when it comes to adopting all the advances in Apple devices and services.


Please enter your comment!
Please enter your name here