The price of Bitcoin has steadily rallied over ten thousand dollars from $ 37,500 to $ 47,500 over the last two weeks. Earlier today it spiked above $ 48k. All 2022 losses have been recovered.
Is the bull market back on? What were the reasons for this latest mini bull run? Will Bitcoin continue to go up in 2022 and set a new all-time high above the $ 69,000 it hit in November 2021?
We can speculate on a few reasons why there’s improved investor confidence in Bitcoin.
Fed Hikes Interest Rates
As we covered in earlier crypto news, in mid-March at the FOMC meeting Federal Reserve chair Jerome Powell announced they would hike interest rates by six basis points, the first rate increase since 2018.
At the time that pumped the Bitcoin price to $ 41k. The move by the Fed was seen as bullish for the financial markets as it combats inflation and allays fears of a recession. Investors moved back into risk on assets like stocks and crypto.
Correlation to Stocks
Bitcoin’s correlation to the S&P 500 has hit a 17 month high according to Markets Insider, the financial news section of Business Insider. The SPX is now back higher than it was when Russia invaded Ukraine, currently at 4575.
That’s 11% off the 2022 lows of 4114 set in late February. Bitcoin is also back above the point where the conflict started.
Nuclear War Averted
So far the Ukraine-Russia crisis has not escalated into World War III, or a nuclear apocalypse. The markets reacted badly on the day that fighting was allegedly taking place on or near the site of a nuclear reactor.
That turned out to be fake news. Some alternative reports are also beginning to surface that Russian forces have in fact shown restraint, including one in Newsweek quoting U.S. intelligence agencies stating Putin is ‘holding back‘ and ‘causing less damage than he could‘.
No Executive Order to Ban Crypto
Rather than moving to ban or implement onerous regulations on cryptocurrency, Joe Biden’s executive order on crypto was mainly focused on protecting investors and ensuring ‘sufficient oversight‘.
The Department of Commerce has been tasked to ‘establish a framework to drive US competitiveness and leadership in, and leveraging of digital asset technologies.’ In other words, crypto is here to stay.
Janet Yellen Warming to Crypto
Treasury secretary Janet Yellon has been a detractor of Bitcoin and cryptocurrency over the years, stating during the 2018 bear market that she was ‘not a fan’ of Bitcoin. Recently she appears to have warmed up to it, telling CNBC:
‘I have a little bit of skepticism because I think there are valid concerns about it. Some have to do with financial stability, consumer and investor protection, and use for illicit transactions. On the other hand, there are benefits from crypto, and we recognize that innovation in the payment system can be a healthy thing. Crypto has obviously grown by leaps and bounds, and it’s now playing a significant role – not really so much in transactions, but in investment decisions of lots of Americans.‘
Terra Buying $ 10 Billion in BTC
Terra founder Do Kwon announced on Twitter he will be adding $ 10 billion in Bitcoin reserves as collateral for the project’s US dollar pegged stablecoin, UST.
News of large institutional projects buying Bitcoin has historically led to rallies in the Bitcoin price. News of Tether (USDT) being backed by reserves has had similar positive effects on the crypto markets. Terra’s native token LUNA pumped 10% today.
Goldman Sachs Makes first OTC Bitcoin Trade
Another major institution that was once a detractor of crypto, US investment bank took a major step towards embracing digital assets by carrying out an over the counter Bitcoin trade with Galaxy Digital.
A Head of Digital Assets at Goldman Sachs stated: “this is an important development in our digital assets capabilities and for the broader evolution of the asset class.”
Sometimes a Bitcoin price move is just in the charts. Bitcoin had been in a sideways trading range for almost three months, since it crashed below $ 45,000 on January 5th. That $ 45k level then acted as resistance four times, on Jan 13th, Feb 9th, Feb 15th, and March 2nd.
Bitcoin kept printing higher lows however, not moving under the first low it set at $ 33,000. After a retest of $ 34,300 on a brief wick quickly bought up on Feb 24th by interested buyers, Bitcoin began grinding up into resistance.
BTC wasn’t rejected a fifth time and once it broke $ 45k, the impulse move to the upside was explosive. The longer the sideways consolidation, the more impulsive the breakout, in either direction – this time the bulls won out. The reasons above could be why, or Bitcoin may have simply been oversold.
Bitcoin now has to contend with the December 2021 range which lasted an entire month. It still has some work to do to close HTF candles above that. The key level to break is the $ 52k -$ 53k area, after that there will be little resistance left and a new ATH in play.
In the short-term the Bitcoin price could retest the 2022 yearly open, which depending on the crypto exchange was around $ 46,200. That could be a good price to buy the dip.
Cryptoassets are a highly volatile unregulated investment product.