Key Takeaways:
The price of Bitcoin (BTC), the world’s largest cryptocurrency by market capitalization, surged past $70,000 yesterday, marking the first time it has risen to this level since hitting an all-time high of $73,737 back in March.
Rising Demand for Spot Bitcoin ETFs and Cooling US Inflation Propping Bitcoin Price
The upward momentum was driven by the increased demand for new spot Bitcoin exchange-traded fund (ETF) listings and data showing a softening inflation in the United States.
This week, the market’s focus will largely be on getting more cues from the Federal Reserve regarding its outlook on interest rates on the US dollar. The minutes from the Federal Open Market Committee’s (FOMC) meeting held in late April will be out this Wednesday, while a number of the rate-setting committee members are scheduled to speak this week, including Fed chairman Jerome Powell.
The focus of last month’s meeting was the expected rate cuts in September. However, the Federal Reserve officials warned they will need to see more evidence of inflation cooling down before deciding whether to slash borrowing rates on the dollar.
Geopolitical Tensions Causing Traders to Choose Gold and Dollar Over Bitcoin
The US dollar also steadied its losses from last week, which limits any major upside for Bitcoin. There are also fears of potential geopolitical instability in the Middle East, which is once again on the verge of escalation following the death of Iran’s President and Foreign Minister in a helicopter crash. This has kept the risk appetite subdued and traders more biased towards safe-haven assets like gold and the dollar.
Bitcoin has been going through a rough patch since hitting an ATH in mid-March while the dwindling capital inflows into the spot Bitcoin ETFs launched in January failed to support the digital asset. Traders and investors were also counting on a rise in demand for BTC following its quadrennial block reward halving event held on April 20th, the result of which will only surface in the coming months.
Meanwhile, the crypto industry is lobbying Congress for new regulations for the market. Next week, the House of Representatives will vote on the Financial Innovation and Technology for the 21st Century Act (FIT21). The bill is set to be one of the most comprehensive and influential documentation for regulating crypto and related services.
What is the Catalyst Behind Bitcoin’s Sudden Price Surge?
Amid the ongoing market recovery from a two-month correction period, Bitcoin’s price jumped nearly 7% in the past 24 hours. The apex cryptocurrency was changing hands at about $71,273 during the early Asian session today. BTC’s daily average trading volume more than doubled in the same period to about $50 billion.
This sudden pump in Bitcoin’s price was the result of short traders heavily liquidating their positions. The total revenue from crypto derivatives trading came to more than $345 million, which is indicative of the bulls asserting control over the Bitcoin market and the assumption that a new all-time high is right around the corner.
On-chain data revealed that several crypto whales have recently begun accumulating more Bitcoin. According to market intelligence firm Santiment, short-term holders of BTC have been busy offloading their holdings to long-term, large-scale investors.
At the same time, spot Bitcoin ETFs trading in the US and Hong Kong have registered notable cash inflows over the past week. The US Securities and Exchange Commission’s recent change of stance regarding Ethereum (ETH) is a piece of welcome news for Bitcoin as well as investors eagerly awaiting ETFs tracking the world’s second-largest cryptocurrency.
At the time of writing, Bitcoin (BTC) is trading at $70,974 – up 5.7% in the last 24 hours.
More News: Satoshi Nakamoto’s Genesis Wallet Now Holds Over 100 BTC After Accidental Transfer
