The Bitcoin (BTC) price just hit its highest level since the 12th of January above $44,000.
The world’s largest cryptocurrency by market cap seems to be taking its cue from bullish momentum in US equities.
The S&P 500 came within a whisker of hitting the 5,000 level for the first time in earlier trade.
The index was last up close to 1% on the day with analysts citing a stronger-than-expected earnings season.
This is likely supporting the Bitcoin price – though the strength of the relationship has varied in recent years, the Bitcoin price has generally been positively correlated to movements in the US equity market.
Anticipation of easier financial conditions later this year could also be helping to support US stocks and the Bitcoin price.
While they signaled no rush to cut rates, various Fed policymakers jawboned about multiple rate cuts later in 2024.
Bitcoin Price Also Benefitting From These Tailwinds
Two other tailwinds are also likely supporting the Bitcoin price right now.
A key index of US regional bank stocks is down 11% in the last month as bank crisis concerns resurface.
Worries were triggered last week after New York Community Bancorp’s dour earnings release, which resulted in a Moody’s downgrade.
Crypto traders will remember back to March 2023 when concerns of a widespread implosion of US regional banks triggered sharp upside in the Bitcoin price, which pumped from lows under $20,000 to nearly $30,000 in just 14 days on safe-haven demand.
Major crypto market thought leaders like Arthur Hayes have predicted that a US bank crisis could return in March.
That’s because that’s when a key Fed liquidity program that saved various regional banks last March is set to expire.
This could send the Bitcoin price to $1 million, Hayes predicted.
Oh baby …
From junk to bankrupt, that’s the future.
And then more money printer go brrrr$BTC = $1mm pic.twitter.com/6Ia00GWYa5
— Arthur Hayes (@CryptoHayes) February 7, 2024
Meanwhile, as safe-haven flows start creeping back, net flows into spot Bitcoin ETFs are acting as another major tailwind.
As per ETF.com data, outflows from Grayscale’s Bitcoin Trust (GBTC) continue to trend lower.
On Tuesday, the newly converted ETF saw just $100 million in outflows, its lowest daily total yet.
That was more than outstripped by inflows into BlackRock’s newly launched ETF, which clocked $137 million in inflows on Tuesday.
Meanwhile, Fidelity’s spot Bitcoin ETF clocked inflows of around $40 million on Tuesday.
These two ETFs have attracted flows of nearly $6 billion since launching less than one month ago, nearly single-handedly canceling out the nearly $6 billion in outflows that GBTC has seen.
Of course, there are another 8 newly launched spot Bitcoin ETFs that have also seen substantial demand.
With the bulk of GBTC selling now seemingly in the rear-view mirror, net ETF inflows will likely provide an ongoing Bitcoin price tailwind.
Where Next for BTC?
Back above $44,000 short-term resistance and its major moving averages, the Bitcoin bulls appear to be back in control.
Indeed, the strong bounce from the 100DMA and November 2023 support in the $38,000s in January looks to have been a short-term bottom.
Risks seem strongly tilted towards the Bitcoin price moving back towards its 2024 highs at $49,000 in the near-future.
That’s assuming ETF flows remain net positive and the market doesn’t experience another hawkish repricing of Fed rate cutting expectations.
With a bank crisis bubbling and the halving quickly approaching, the Bitcoin price could soon vault above $50,000.
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