Bitcoin experienced a 5.9% increase between June 2 and 5, reaching a high of $71,746 before its rally was halted. This surge was supported by nearly $1 billion in inflows into United States-based spot Bitcoin exchange-traded funds (ETFs), indicating a strong demand from institutional investors.
The positive momentum of Bitcoin was further boosted by the significant growth of unrealized losses in the U.S. banking sector. Despite favorable conditions, such as a more favorable stance towards crypto from U.S. lawmakers, Bitcoin was unable to break above the $72,000 mark.
Regulatory uncertainty continues to be a concern despite some positive developments. Matt Hougan, the chief investment officer at Bitwise, believes that regulatory ambiguity has prevented financial advisers from increasing their exposure to crypto assets. However, there is a gradual shift towards regulatory clarity in the U.S., which began with the 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 indicates a more crypto-friendly approach from U.S. regulators. Despite this, President Joe Biden’s veto of the SAB 121 repeal highlights that there is still a long way to go for crypto acceptance.
A recent report by the Federal Deposit Insurance Corporation (FDIC) revealed that U.S. financial institutions are facing $517 billion in accounting losses due to the impact of higher rates on their mortgage-backed securities. The report also mentioned that 64 banks were at risk of insolvency in the first quarter of 2024.
Arthur Hayes, the co-founder of BitMEX, suggested that increasing money supply could be a solution to economic issues, benefiting assets like Bitcoin. He pointed out that Bitcoin’s previous bull run in March 2023 was triggered by the collapses of Silicon Valley Bank and Silvergate Bank, indicating a similar pattern could emerge in 2024.
However, Hayes warned that Bitcoin’s price might drop before any positive macroeconomic events occur. Investors are anticipating a correction in Bitcoin’s price before a potential rally, considering the uncertainty in the market.
While there is potential for Bitcoin to reach new all-time highs in 2024, the strong performance of U.S.-listed tech stocks and the stock market in general may reduce the appeal of alternative assets like Bitcoin. Influencers and social network posts impacting stock market movements could also influence investor interest in cryptocurrencies.
Overall, while Bitcoin has the potential to surpass $71,000 in the near future, it may face challenges as investors remain focused on traditional investment options. This article serves as general information and should not be considered legal or investment advice. The opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.