Bitcoin (BTC) price has been in a bullish trend in the last 24 hours, experiencing significant gains amidst favorable market conditions. Several factors have contributed to this upward movement, reflecting increased investor confidence and optimism in the cryptocurrency market. At the time of writing, Bitcoin price is trading for $63,140, representing a climb of nearly 6% in the past 24 hours.
BTC/USD 24-hour price chart (source: CoinMarketCap)
Favorable Macroeconomic Data Boosts Confidence
The recent surge in Bitcoin’s price is closely tied to favorable macroeconomic data, particularly concerning the outlook for monetary policy from the U.S. Federal Reserve (Fed). Reports indicating steady jobless claims and robust labor market data have buoyed investor sentiment, signaling potential interest rate reductions by the Fed.
The U.S. Department of Labor reported steady jobless claims at 208,000, matching the lowest levels since mid-February, suggesting ongoing strength in the labor market. Additionally, the Employment Cost Index climbed 4.2% in the first quarter year-over-year, reinforcing investor confidence in the economy.
Market expectations for Fed Funds Rate:
-May 1, 2024: Hold
-June 12, 2024: Hold
-July 31, 2024: Hold
-Sep 18, 2024: 25 bps cut to 5.00-5.25%
-Nov 7, 2024: Hold
-Dec 18, 2024: Hold pic.twitter.com/mq3viGNSSC— Charlie Bilello (@charliebilello) April 26, 2024
Investors are now pricing in a higher probability of the Fed cutting interest rates below 5.00% by the end of 2024, leading to increased optimism in risk assets like cryptocurrencies. Lower yields on fixed-income investments often drive capital towards higher-return assets such as stocks, commodities, and cryptocurrencies.
This shift in expectations has contributed to Bitcoin’s recent price surge, as investors seek alternative avenues for potential returns in a low-interest-rate environment.
Growth in U.S. M2 Money Supply Drives Bitcoin Performance
Another significant factor driving Bitcoin’s recent gains is the positive adjustment in the U.S. M2 money supply, which includes cash, savings, and short-term bank deposits. The growth in the money supply, marking its first increase since November 2022, historically correlates with strong performances in the cryptocurrency market.
Previous bull markets in Bitcoin, including those in 2014, 2017, and 2021, followed similar trends, indicating a potential correlation between monetary policy and cryptocurrency performance.
With Bitcoin’s market capitalization standing at approximately $1.2 trillion, even a modest shift in investment allocation towards Bitcoin could result in significant market inflows. Data suggests that there has been a growing acceptance and integration of Bitcoin into diverse investment portfolios, further supporting its upward trajectory.
Grayscale ETF Inflows Boost Market Sentiment
Grayscale, an investment manager, has recently recorded significant inflows into its spot BTC ETF, IBIT, marking a pivotal moment for the trading counters. This comes after nearly 80 days of spot Bitcoin ETFs trading on Wall Street, with Grayscale joining the fray. Reports indicate that Grayscale recorded inflows of up to $63 million on Friday alone, contributing to a total net inflow of $378.5 million. The influx of capital into Grayscale’s ETF suggests a growing interest among institutions in gaining exposure to Bitcoin through regulated investment vehicles.
Some analysts attribute the surge in Grayscale’s trading corridors to the upcoming launch of its Bitcoin Mini Trust. This new mini-fund spot Bitcoin ETF offers a significantly lower fee relative to the existing GBTC, aiming to provide investors with a more cost-effective way to invest in Bitcoin. The introduction of this new offering underscores the increasing competition in the Bitcoin ETF market and reflects growing demand for accessible and efficient investment products tied to cryptocurrency.
In addition to Grayscale’s ETF, other BTC ETFs have also witnessed notable inflows, contributing to bullish sentiment in the market. Blackrock recorded $12.7 million in inflows, albeit marking one of the lowest figures among ETFs analyzed. Fidelity, on the other hand, recorded $102.6 million in inflows, demonstrating sustained investor interest in Bitcoin-related investment products. Franklin saw a significant uptick, with $60.9 million in inflows, marking their best day yet.
These numbers paint a positive picture of investor sentiment towards Bitcoin and its associated investment vehicles. Despite low trading volumes typically observed over the weekend, Bitcoin’s price has continued to recover, ranging between $62,000 and $64,000. If this optimism persists into the new week, the market could lean more towards a price range of $70,000 to $80,000, deviating from the current expectation of a retracement to $52,000.
BTC/USD 7-day price chart (source: TradingView)
Concurrently, the influx of capital into Bitcoin ETFs, particularly Grayscale’s IBIT, signals growing institutional interest and confidence in the cryptocurrency market, further supporting its upward trajectory.
