Bitcoin's Value Soars Past AU$67,500 (US$44,000) as Optimism Floods the Market

Posted on 08/02/2024 | 362 Views

Bitcoin (BTC) has surged, marking a notable peak since January 12, pushing past the AU$67,500 (US$44,000) mark, riding the wave of a buoyant US stock market. The S&P 500 nearly breached the $5,000 milestone, bolstered by a robust earnings season, with Bitcoin's trajectory closely mirroring these equity gains. This correlation, though fluctuating over the years, has predominantly seen Bitcoin's value align with US market movements.

The anticipation of looser monetary policy by year-end is propelling both US equities and Bitcoin, as Federal Reserve officials hint at potential rate cuts in 2024, fostering a climate ripe for Bitcoin's ascent.

Bitcoin's Current Rally Fuelled by Multiple Factors

Beyond the stock market's influence, Bitcoin's current rally is buoyed by two additional key factors. Firstly, the US regional banking sector is under scrutiny, with a key index dropping 11% over the past month, reigniting concerns of a banking crisis similar to March 2023. This fear, sparked by New York Community Bancorp's disappointing earnings and subsequent Moody’s downgrade, has historically driven investors towards Bitcoin as a safe haven, reminiscent of its leap from under AU$30,600 (US$20,000) to nearly AU$45,900 (US$30,000) in a fortnight last year.

Arthur Hayes, a leading crypto figure, speculates the potential return of a banking crisis in March 2024, as a crucial Federal Reserve liquidity program concludes, potentially catapulting Bitcoin's value to an unprecedented AU$1.53 million (US$1 million).

Additionally, a surge in investments in spot Bitcoin ETFs is providing significant momentum. Despite ongoing outflows from Grayscale's Bitcoin Trust (GBTC), the recent conversions and launches of ETFs like BlackRock and Fidelity's have seen inflows overshadowing GBTC's outflows, driving nearly AU$9.18 billion (US$6 billion) into the market.

Bitcoin's Path Forward

With Bitcoin now surpassing short-term resistance levels and its significant moving averages, the bulls seem to have regained dominance. The rebound from January's support around the AU$58,260 (US$38,000) region suggests a pivotal moment for Bitcoin's valuation.

Assuming the continuation of positive ETF inflows and absent a shift in Federal Reserve policy expectations, Bitcoin's trajectory is poised towards revisiting its 2024 peak near AU$75,066 (US$49,000). With the looming potential of a banking crisis and the anticipated Bitcoin halving event, the stage is set for Bitcoin to potentially breach the AU$76,560 (US$50,000) threshold, heralding an exhilarating era for crypto enthusiasts and investors alike.

 

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