Quick look:
- bitcoin surpasses $70,000: Driven by spot purchases and btc ETF purchases, bitcoin price surpasses $70,000, sparking a debate about bull market versus peak.
- On-chain indicators: analyst ELI5 of TLDR suggests that most indicators point to a nascent bull market, with a critical bounce at $60,000 rekindling investor interest.
- Economic Context: bitcoin's 51% year-to-date gain aligns with growing US monetary expansion, with the M2 monetary base surpassing $21 trillion.
The price of bitcoin has surpassed the $70,000 mark, a threshold that has captivated the attention of investors and analysts alike. This milestone, driven by a significant increase in spot purchases and spot btc exchange-traded funds (ETFs) purchases, has led the cryptocurrency community to debate whether we are witnessing the beginning of a prolonged bull market or approaching a market peak.
On-chain indicators and market sentiment
Renowned analyst, “TLDR's ELI5”, has weighed in on the situation, stating that most on-chain indicators suggest a nascent bull market. Even though some metrics are showing signs of higher patterns, the overall sentiment remains bullish. The recent rebound from price support near $60,000 has reignited investor interest. Farside Investors reported an inflow of approximately $950 million last week, a level of investment inflows not seen since March. If this trend persists, bitcoin price could surpass even the most optimistic projections.
Currently, bitcoin is trading just below $70,000, with the 20-day exponential moving average (EMA) positioned at $64,371. The relative strength index (RSI) remains positive, suggesting a higher probability of a bullish breakout. Breaking through the $68,000 resistance level is a crucial step that could push bitcoin price towards $73,777. However, analysts warn that reaching this target may trigger a significant bearish response, possibly leading to a price correction.
bitcoin Gains 51% YTD as M2 Money Supply Hits $21 Trillion
bitcoin's impressive 51% year-to-date gain reflects investors' growing anticipation of US monetary expansion. The M2 monetary base, which includes cash, demand deposits, and nearly easily convertible money, has exceeded $21.0 trillion as of April 2024. This increase in the money supply is significant. Typically, such a rise increases the attractiveness of alternative assets like bitcoin. These assets are often considered hedges against inflation and currency devaluation.
Further fueling the bullish sentiment is the dramatic drop in bitcoin reserves on major exchanges. Only 1,918,417 <abbr title="bitcoin“>btc were available on trading platforms as of May 19, marking a seven-year low. This reduction in bitcoin available for trade means strong investor confidence and long-term holding behavior as more and more investors choose to store their bitcoin in private wallets rather than keeping them on exchanges.
Future outlook and market dynamics
Current market dynamics suggest a complex interplay of factors influencing bitcoin's price trajectory. Dwindling foreign exchange reserves point to increasingly tight supply, which could drive up prices if demand continues to rise. Additionally, the influx of capital from institutional investors, as evidenced by the recent inflow of $950 million. It underlines a strong interest in bitcoin as a long-term investment.
As bitcoin approaches the $70,000 mark, the next few weeks will be critical in determining its future direction. If the price breaks and sustains above the $68,000 resistance level, it could set the stage for a run towards $73,777. However, investors should remain alert for possible bearish reactions to these higher price levels.
bitcoin's rally to $71,183 amid increased spot buying and ETF activity marks a major milestone in its market trajectory. While on-chain indicators and the broader economic context suggest the beginning of a new bull market, the possibility of a market peak cannot be completely ruled out. Investors should closely monitor market signals and trends to make informed decisions as bitcoin navigates this exciting phase.
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