Bitcoin experienced a notable 5.9% increase from June 2 to 5, reaching a peak at $71,746 before its rally came to a halt. This surge was propelled by nearly $1 billion flowing into spot Bitcoin exchange-traded funds (ETFs) based in the United States, highlighting a strong demand from institutional investors.
The positive momentum of Bitcoin was further supported by the significant growth of unrealized losses in the U.S. banking sector. Despite favorable conditions, such as a more crypto-friendly stance from U.S. lawmakers, Bitcoin (BTC) struggled to break through the $72,000 mark.
Regulatory uncertainty continues to linger despite some positive developments in the market. Matt Hougan, the chief investment officer at Bitwise, pointed out that financial advisers have been hesitant to increase their exposure to crypto due to this uncertainty. However, he remains optimistic, stating that the U.S. is gradually moving towards regulatory clarity, particularly with the recent repeal of the U.S. Securities and Exchange Commission’s Staff Accounting Bulletin 121 by Democrats.
The approval of spot Ether (ETH) ETFs by the SEC signifies a shift in the regulatory environment, as U.S. regulators seem to be less inclined to engage in anti-crypto disputes following several court losses. Nonetheless, President Joe Biden’s veto of the SAB 121 repeal suggests that the crypto industry still has a long way to go.
A report from the Federal Deposit Insurance Corporation (FDIC) revealed that U.S. financial institutions are dealing with $517 billion in accounting losses due to the impact of higher rates on residential mortgage-backed securities. The report also noted that 64 banks were at risk of insolvency in the first quarter of 2024.
Bitcoin’s price may face a drop ahead of negative macroeconomic events, according to BitMEX co-founder Arthur Hayes. He suggested that increasing liquidity, or “printing more money,” could benefit assets like Bitcoin. Hayes highlighted a 43% surge in Bitcoin’s price over a 30-day period in March 2023, triggered by the collapses of Silicon Valley Bank and Silvergate Bank, indicating a potential pattern for 2024.
However, Hayes cautioned that Bitcoin’s price might initially decline if the stock and bond markets experience challenges, despite potential interventions by the U.S. Federal Reserve to prevent generalized bankruptcy. Past trends have shown that Bitcoin’s price could correct before rallying, reflecting market uncertainty and investor behavior.
Overall, while Bitcoin has shown resilience and potential for new all-time highs in 2024, the current market conditions, including a strong stock market performance and investor preferences for fixed-income assets, may hinder significant upward movements in the near future. Investors should remain cautious and monitor the evolving market trends to make informed decisions.