Bitcoin experienced a 5.9% increase from June 2 to 5, reaching $71,746 before facing a roadblock. This surge was supported by nearly $1 billion flowing into U.S.-based spot Bitcoin exchange-traded funds (ETFs), indicating strong interest from institutional investors.
The positive momentum of Bitcoin was also fueled by the substantial unrealized losses in the U.S. banking sector. Despite favorable conditions, such as a more crypto-friendly approach from U.S. lawmakers, Bitcoin failed to surpass the $72,000 mark.
Regulatory uncertainty remains a significant challenge, hindering financial advisers from expanding their exposure to cryptocurrencies. However, there is a belief that the U.S. is moving towards regulatory clarity, evident from the Democrats voting to repeal the SEC’s Staff Accounting Bulletin 121.
The approval of spot Ether (ETH) ETFs by the SEC indicates a shift towards a more crypto-friendly stance. Nonetheless, U.S. President Joe Biden’s veto of the SAB 121 repeal suggests that there is still a long way to go for crypto regulation.
A recent FDIC report revealed that U.S. financial institutions are grappling with $517 billion in accounting losses due to the impact of higher rates on their residential mortgage-backed securities. This report, released on May 29, highlighted that 64 banks were on the verge of insolvency in the first quarter of 2024.
Arthur Hayes, co-founder of BitMEX, suggested that the solution to economic challenges may involve “printing more money,” which could benefit assets like Bitcoin. Hayes pointed out that Bitcoin’s previous bull run in 2023 was triggered by certain banking collapses, hinting at a possible pattern in 2024.
Investors should be prepared for a potential price correction in Bitcoin ahead of negative macroeconomic events. Despite the optimistic outlook, uncertainties in the stock and bond markets could lead to a decline in Bitcoin’s price before a potential rally.
While there is anticipation for a new all-time high in Bitcoin’s price in 2024, external factors such as the performance of U.S. tech stocks and the stock market may influence investor sentiment. Ultimately, the path to surpassing $71,000 in the short term depends on market conditions and investor behavior.