Bitcoin, the big player in the cryptocurrency market, took a little dip below $31,000 after a late surge on Monday. But don’t worry, it’s still riding high on some positive developments that happened in June.
Just a quick update: Bitcoin briefly climbed back up to its recent heights above $31,000 on Monday. It was a momentary victory before it dipped slightly below that crucial mark. As of now, the largest cryptocurrency is trading at $30,690, showing a nice 2% increase over the past 24 hours.
Bitcoin daily chart. (CoinDesk Indices)
So, what’s fueling this renewed enthusiasm among investors? Well, it seems like the spot bitcoin ETF filings made by financial giants like BlackRock in mid-June are still casting a positive influence. Plus, we had a few other crypto-friendly events during the month that added to the excitement.
Last Thursday, Bitcoin had actually traded above $31,000, but then it took a hit along with other assets due to concerns about rising inflation. These worries were triggered by a surprisingly strong ADP private sector jobs report. In fact, Bitcoin even slipped below its recent support level of $30,000. However, those concerns seem to have dissipated for now. After lingering just above $30,000, Bitcoin experienced a sudden surge of over 2% in about 90 minutes during the afternoon before pulling back a bit.
Over the past month, Bitcoin has seen a solid 20% rise, with much of the gains coming after the spot BTC filings. According to a report by Standard Chartered Bank, Bitcoin could reach $50,000 by the end of this year and even soar past $120,000 by the close of 2024. Impressive, right?
Mark Connors, the head of research for digital asset management firm 3iQ, believes that the recent lift in digital assets is the result of several tailwinds from June finally sinking in. He mentioned that the price action in June was mainly driven by the spot BTC ETF filings. In addition, former Securities and Exchange Commission (SEC) Chair Jay Clayton made some favorable comments about the ETF application, which further fueled investors’ optimism.
Clayton himself stated on CNBC that if the filings address certain protections similar to those found in bitcoin futures ETFs, it would be hard to resist approving a spot bitcoin ETF. This statement resonated with investors and added more positivity to the mix.
Connors also pointed out that investors might be gradually warming up to the potential approval of the Congressional Digital Assets Market Structure and Investor Protection Act. This act aims to determine whether a digital asset is decentralized or not. Such a determination could have significant implications, as most developers prefer to avoid joining centralized entities bound by securities laws.
Now, let’s take a quick look at the overall crypto market. Ether, the second-largest cryptocurrency, was recently trading at around $1,890, showing a modest 1.8% increase from Sunday. Other major cryptos also turned from red to green or even made significant jumps into positive territory. Tokens like MATIC (Polygon’s token) and ADA (Cardano’s token) rose by more than 6% and 2% respectively. BNB, the native crypto of the Binance exchange, also experienced a rise of over 4%.
As for the broader crypto market performance, the CoinDesk Market Index indicates a 1.9% increase. It seems like things are looking up in the crypto world.
On the other hand, equity indexes have rebounded after a rare off week in 2023. Both the S&P 500 and Nasdaq Composite have started ticking up, and investors are eagerly awaiting Wednesday’s release of the June U.S. Consumer Price Index (CPI). In May, the CPI dropped to 4% from a reading of 9% almost a year ago.
Experts predict that the index will fall below 4%, although there’s a possibility it could tumble to 2.8%, even with inflated housing prices. The potentially contradictory data, along with the perplexing jobs data from last week (nonfarm payrolls sank slightly), might complicate the decision of the U.S. central bank regarding a potential interest rate hike later this month.
Currently, the Federal Reserve probability tracker indicates a more than 90% likelihood of a 25 basis point rate hike. However, critics of the Fed’s prolonged monetary hawkishness believe that the bankers are treading on thin ice and risking an economic downturn. Senior analyst Edward Moya from foreign exchange market maker Oanda mentioned that even if we get a strong report, the Fed seems determined to deliver a quarter-point rate rise. Following last month’s pause, it appears that the Fed is set on signaling tightening until a more significant slowdown is observed.
Now, here’s the interesting part: Aggressive rate increases have had a noticeable impact on crypto markets. Moya predicts that Bitcoin will likely remain around $30,000 as Wall Street eagerly awaits any updates on the potential approval of a U.S. Bitcoin ETF. Furthermore, market expectations for a 25 basis point hike at the next Fed meeting are pretty high.
