3 Reasons why Bitcoin failed to break $72,000

By Marius Morra, CEO and Co-founder of TOKERO Crypto Exchange

Regulatory uncertainty and volatile macroeconomic events may weaken BTC price growth in the short term.

Bitcoin rose 5.9% between June 2 and 5, but its rally was halted at $71,746. The move was supported by nearly $1 billion inflows into U.S. spot Bitcoin exchange-traded funds (ETFs), indicating strong demand from institutional investors.

Bitcoin’s bullish momentum was also fueled by the significant increase in unrealized losses in the US banking sector. However, despite favorable conditions, including a friendlier attitude towards cryptocurrencies from US lawmakers.

Regulatory uncertainty persists despite positive developments

According to Matt Hougan, Bitwise’s chief investment officer, regulatory uncertainty has prevented financial advisors from increasing their exposure to cryptocurrencies. Still, Hougan believes the U.S. is moving toward regulatory clarity, a shift that began when Democrats voted to repeal the U.S. Securities and Exchange Commission’s (SEC) Accounting Staff Bulletin 121.

The SEC’s approval of spot ETFs for Ether is another sign that US regulators are less inclined to initiate anti-crypto disputes after multiple court losses, including the conversion of Grayscale’s Bitcoin Trust into a regular ETF. However, Hougan notes that US President Joe Biden’s veto of the repeal of SAB 121 shows that “crypto still has a long way to go.”

According to a report by the Federal Deposit Insurance Corporation (FDIC), US financial institutions currently have $517 billion in book losses due to the impact of higher rates on residential mortgage-backed securities. The report, published on May 29, said 64 banks were on the verge of insolvency in the first quarter of 2024.

Bitcoin price could fall ahead of negative macroeconomic events

BitMEX co-founder Arthur Hayes argued that the most likely solution is “printing more money,” which is extremely favorable for scarce assets like Bitcoin. According to Hayes, Bitcoin’s 43% 30-day rally that began in March 2023 was triggered by the Silicon Valley bank collapses and Silvergate. A similar model could appear in 2024.

However, even if this theory is correct, i.e. the US Federal Reserve will inject liquidity into the system to avoid a widespread bankruptcy or reduce pressure on the banking system through repurchase agreements and special lines of credit, the odds are those prices of Bitcoin to fall first if the stock and bond markets suffer.

Before initiating the March 2023 rally, Bitcoin price fell to $19,559, the lowest level in nearly two months. At the time, the move reflected the same uncertainty that moved the two-year US Treasury yield from 5.07% to 3.98%, which is highly unusual and indicates that traders were willing to cut their yield for safety a government-backed asset.

As a result, investors could expect a price correction ahead of Bitcoin’s eventual rally, although there is no guarantee that the 2023 trend will repeat itself, especially given the remarkable record of recurring inflows by US spot Bitcoin ETFs, which have raised more than $52 billion since their launch in January.

Articolul precedentLet’s share the passion for Football and Gambling!
Articolul următorAmusnet will showcase ideas and connect with industry leaders at iGB L!VE