Bitcoin experienced a 5.9% increase from June 2 to 5, reaching a peak at $71,746. This surge was supported by nearly $1 billion flowing into U.S.-based spot Bitcoin exchange-traded funds (ETFs), indicating a strong demand from institutional investors.
The optimistic momentum of Bitcoin was further boosted by the substantial growth of unrealized losses in the U.S. banking sector. Despite favorable conditions, such as a more crypto-friendly approach from U.S. legislators, Bitcoin (BTC) failed to break the $72,000 barrier.
Regulatory uncertainties continue to linger despite positive advancements. Matt Hougan, the chief investment officer at Bitwise, highlighted that financial advisers are hesitant to increase their exposure to crypto due to these uncertainties. However, Hougan remains hopeful that the U.S. is moving towards regulatory clarity, especially after the Democrats voted 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 in the U.S. regulatory stance towards crypto assets. This change comes after several court defeats, including the conversion of Grayscale’s Bitcoin Trust into a regular ETF. Nonetheless, President Joe Biden’s veto of the SAB 121 repeal signifies that the crypto industry still faces challenges.
A report from the Federal Deposit Insurance Corporation (FDIC) revealed that U.S. financial institutions are grappling with $517 billion in accounting losses due to higher rates affecting their residential mortgage-backed securities. The report, released on May 29, also pointed out that 64 banks teetered on the edge of insolvency in the first quarter of 2024.
Arthur Hayes, the co-founder of BitMEX, suggested that increasing the money supply could be a solution to market woes, which would benefit assets like Bitcoin. He highlighted that Bitcoin’s previous 43% surge in March 2023 was triggered by the failures of Silicon Valley Bank and Silvergate Bank, hinting at a similar pattern emerging in 2024.
Despite the potential for a Bitcoin rally, there is a possibility of a price correction ahead of negative macroeconomic events. Investors could anticipate a drop in Bitcoin’s price before any significant upward movement. The unprecedented inflows into U.S. spot Bitcoin ETFs, totaling over $52 billion since their launch in January, add to the uncertainty surrounding Bitcoin’s future price movements.
In conclusion, while Bitcoin could reach new all-time highs in 2024, the current strong performance of U.S. tech stocks and the stock market in general may hinder its progress. Investors’ comfort with traditional assets might limit Bitcoin’s ability to surpass the $71,000 mark in the short term.
This article serves as general information and should not be construed as legal or investment advice. The opinions expressed here are solely those of the author and do not necessarily represent the views of Cointelegraph.