Bitcoin experienced a 5.9% increase from June 2 to 5, reaching a peak at $71,746 before its rally was halted. This surge was supported by nearly $1 billion flowing into spot Bitcoin exchange-traded funds (ETFs) based in the United States, showcasing strong interest from institutional investors.
The positive momentum of Bitcoin was further fueled 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 above the $72,000 mark.
Regulatory uncertainties continue to linger despite some positive developments. Matt Hougan, the chief investment officer at Bitwise, pointed out that financial advisers are hesitant to increase their exposure to cryptocurrencies due to regulatory ambiguity. However, Hougan remains optimistic about the U.S. moving towards regulatory clarity, especially after the Democrats’ decision to repeal the U.S. Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin 121.
The approval of spot Ether (
ETH
) ETFs by the SEC indicates a shift towards a more crypto-friendly approach by U.S. regulators. Despite setbacks like President Joe Biden’s veto of the SAB 121 repeal, there is a sense that progress is being made in the regulation of cryptocurrencies.
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 residential mortgage-backed securities. This report, released on May 29, also highlighted that 64 banks were at risk of insolvency in the first quarter of 2024.
Looking ahead, BitMEX co-founder Arthur Hayes suggested that the solution to economic challenges might involve printing more money, which could benefit assets like Bitcoin. Hayes pointed out that previous bull runs in Bitcoin were triggered by financial collapses, hinting that a similar pattern could emerge in the future.
However, Hayes also warned that Bitcoin’s price might initially decline if negative macroeconomic events affect the stock and bond markets. Past trends show that Bitcoin’s price could drop before rallying, as seen in the events leading up to the surge in March 2023.
Investors may anticipate a price correction before another potential Bitcoin rally, although nothing is certain given the unpredictable nature of the market. The consistent inflows into U.S. spot Bitcoin ETFs, which have accumulated over $52 billion since their launch in January, add a layer of complexity to predicting Bitcoin’s future performance.
In conclusion, while Bitcoin has the potential to reach new all-time highs in 2024, external factors such as stock market performance and regulatory developments could influence its trajectory. Investors should remain cautious and informed about market trends to make well-informed decisions. This article serves as general information and should not be construed as legal or investment advice. The opinions expressed here are the author’s own and do not necessarily reflect those of Cointelegraph.