The price of Bitcoin is approaching $70,000, supported by Trump's election promises. What's the story?
Today's market analysis on behalf of Rania Gule Market Analyst at XS.com
July 30, 2024 (Investorideas.com Newswire) Last week, the BTC/USD pair exhibited ambiguous price movements. Initially, it traded down to the $63,400 area, but then it surged strongly and has now recovered all previous losses. It began trading today, Tuesday, near $66,570.
From my perspective, we can link the bearish price movement in the cryptocurrency market to the launch of new ETH exchange-traded funds (ETFs) on the Chicago Board Options Exchange (CBOE) and the New York Stock Exchange (NYSE), which caused short-term selling as part of a "sell the news" strategy, but its consequences have currently been avoided. Interest in crypto assets has recovered with the spread of ETH-based ETFs as investment opportunities from major institutional market whales. It is also worth noting that last week, the net inflow of funds into Bitcoin ETFs was $535.3 million.
Now, Bitcoin's price is rising, and I believe this is due to several statements made by Donald Trump on Saturday at the Bitcoin 2024 conference in Nashville. He mentioned that if elected, the government would stop selling the Bitcoin it currently holds and would transfer it to a strategic reserve.
Regarding this plan, the reality is that of the approximately 213,000 BTC controlled by U.S. authorities, 94,000 were seized in connection with the Bitfinex exchange hack, so it may not be easy to eventually convert them into state assets.
Trump also promised to make America the "cryptocurrency capital of the world," boost the development of the crypto industry, and replace the current SEC Chairman Gary Gensler with a postmaster. These statements have led to a significant increase in demand for Bitcoin, pushing its price back to a two-month high of around $69,800. The prices also received additional support from the release of the June Personal Consumption Expenditures (PCE) price index data, which rose from 0.0% to 0.1% month-over-month and fell from 2.6% to 2.5% year-over-year. Thus, the decline in price pressures in the economy increases the likelihood of a rate cut by the Federal Reserve in September, as the markets currently price in.
Crypto asset products recorded net inflows of $245 million last week, down from $1.35 billion after a week of mixed market sentiment. Meanwhile, the launch of Ethereum ETFs also led to a significant increase in the trading volume of crypto assets.
Net inflows recently totalled $245 million. From my perspective, this move has so far pushed market liquidity to a record level of $20.5 billion. The appearance of Ethereum ETFs on the U.S. market recently boosted weekly trading volumes across crypto products to a two-month high of $14.8 billion.
The U.S. alone saw net inflows of $272 million, which I believe might be due to the Bitcoin conference in Nashville and the increasing role of cryptocurrency-interested voters in the upcoming U.S. elections. There is a historical conviction in the markets that the Bitcoin conference has always been an event to "sell the news".
In conclusion, I can say that Bitcoin's price increases in the medium and long term may be driven by heightened positive sentiment arising from rumours that the U.S. government might add Bitcoin to its reserve assets if Republican candidate Donald Trump is elected president in the upcoming November elections.
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