Bitcoin Stuck in a Range – But Bullishness Remains

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This text discusses two main topics: the performance of Bitcoin relative to gold and El Salvador’s adoption of Bitcoin.

Bitcoin currently trades at $67,345, marking a 3% decrease over the past week. Despite being stuck within a price range at elevated levels, Bitcoin has yet to surpass new record highs. However, with Bitcoin’s current value falling short of the $70,000 threshold, this represents an approximately 400% rise from its late 2022 lows. Investors remain on edge as they anticipate the unpredictable 2024 presidential election and the long-awaited shift in monetary policy from the Federal Reserve toward increased accommodativeness.

In the face of financial instability, U.S. Treasury Secretary Janet Yellen has issued warnings concerning the growing $34 trillion American national debt. During a gathering of the Group of Seven finance ministers in Italy, she shared with Bloomberg her concern that “we’ve bumped up our expectations for interest rates.” This adjustment, she explained, could potentially make it more difficult to manage both budget deficits and the associated costs of interest payments.

 

Can Bitcoin Help the Debt Crisis?

According to reports, Donald Trump, a former US president and potential 2024 Republican nominee, has shown interest in Bitcoin as a possible solution to the country’s massive debt crisis. This information was shared by Colin Wu, who mentioned that David Bailey, CEO of Bitcoin Magazine and a Trump campaign cryptocurrency advisor, disclosed this during a meeting. Bailey also urged the public to refer to the recent surge in Bitcoin’s price as the “Trump pump,” giving credit to the ex-president for its rise.

Trump, having recently started accepting cryptocurrency donations following his NFT sales, voiced his criticism towards President Biden’s stance on digital currencies. “Biden seems determined to make bitcoin and crypto gradually fade away in the US,” Trump stated. In contrast, he expressed a favorable viewpoint, sharing on Truth Social, “I embrace cryptocurrency businesses wholeheartedly, along with everything else associated with this innovative and rapidly growing sector.”

 

Renewed Bullishness

The BlackRock Bitcoin iShares ETF (IBIT) has overtaken Grayscale’s Bitcoin Trust (GBTC) as the largest Bitcoin fund globally, following a $102 million investment on Tuesday. Currently, IBIT manages close to $20 billion in Bitcoin assets, whereas GBTC handles around $19.7 billion, with a net outflow of $105 million on the same day.

Ibit’s purchasing trend has noticeably increased in the wake of Bitcoin and the cryptocurrency market’s optimistic outlook. The bullish momentum picked up steam after the acceptance of Ether ETF applications and renewed endorsement of crypto from major U.S. political figures. This change represents a substantial shift for Ibit, which previously saw minimal to no investments before May 15 and even registered its first day of redemptions in April, fueling pessimistic sentiments during that period.

Bitcoin has been trapped in a price standstill between $60,000 and $72,000 for approximately two months, much to the dismay of short-term investors who anticipated substantial price jumps. According to Bitcoin analyst Willy Woo, this prolonged period of consolidation under bullish market conditions is beneficial for future growth. “The recent 2.5-month-long consolidation during a bullish trend is advantageous for Bitcoin,” Woo commented on X.

As a crypto investor, I closely follow Woo’s analysis based on the Bitcoin Macro Oscillator (BMO), a metric I trust to filter out short-term market noise and indicate the long-term trend of Bitcoin (BTC). This indicator utilizes several key indicators, including MVRV (Market Value to Realized Value), VWAP (Volume-Weighted Average Price), CVDD (Cumulative Value Days Destroyed), and the Sharpe ratio. In past market cycles during 2017 and 2021, BTC peaked when the BMO reached a value of 1.8. Currently, the indicator hovers below this level, indicating potential for further upward price movement. Woo’s prediction aligns with my expectation that the BMO could reach 1.8 once again, potentially leading to additional gains in Bitcoin’s price.

As a seasoned crypto investor, I’ve been closely monitoring the comparison between Bitcoin and gold, as highlighted by veteran trader Peter Brandt. While Bitcoin has shown impressive gains, it hasn’t managed to surpass its 2021 peak of around $69,000 on an inflation-adjusted basis. In 2021 alone, Bitcoin hit heights above $64,000 in April and nearly touched $70,000 in November. However, by March 2024, Bitcoin reached $73,750 due to optimism surrounding halving events and Bitcoin ETFs. Yet, it hasn’t regained its position above gold at those levels.

 

Wood Supports Bukele

If El Salvador persists with its Bitcoin and artificial intelligence adoption under President Nayib Bukele’s leadership, as per ARK Invest CEO Cathie Wood’s assessment, the country’s GDP could potentially grow tenfold within the next five years. This is due to El Salvador’s commitment to becoming a hub for these revolutionary technologies – Bitcoin and artificial intelligence. According to Wood, who made this remark following a meeting with Bukele, “the real GDP of El Salvador could expand dramatically during the next five years given President Bukele’s vision to establish the country as a haven for the Bitcoin and AI industries – two economic and technological innovations that have significantly impacted history.”

Wood and Keiser meet with Bukele

As a researcher studying the recent developments in Bitcoin and financial markets, I came across an intriguing discussion between Wood and Bukele during their meeting. They explored the potential integration of Bitcoin into capital markets, artificial intelligence, and tax policies. Bukele’s Bitcoin advisor, Max Keiser, shared details about a proposed plan to boost El Salvador’s GDP to $300 billion by 2029, which was presented by Wood during their conversation. The gathering also featured the participation of Bitcoin advocate Stacy Herbert, U.S. economist Arthur Laffer, and ARK Invest research associate Marc Seal.

As a crypto investor and follower of global economic news, I’m thrilled to share that El Salvador’s economy has experienced remarkable growth since President Bukele took office in mid-2019. According to World Bank data, the country’s GDP reached an impressive $32.4 billion in 2022, marking a significant leap of over 30% from just three years ago. This places El Salvador on the brink of joining the ranks of economies like Romania, the Czech Republic, and Chile, each with a GDP above the $300 billion threshold.

As a crypto investor, I’m excited to see more companies following MicroStrategy’s lead and adopting Bitcoin as a treasury asset. Recently, Semler Scientific, Inc., a healthcare technology leader, made this move. Their board of directors decided that Bitcoin would be their primary reserve asset. They purchased 581 bitcoins for a total investment of $40 million, including fees and expenses. This is yet another validation of Bitcoin’s growing role as a valuable store of wealth in corporate treasuries.

Eric Semler, chairman of Semler Scientific, expressed confidence in Bitcoin’s role as a dependable store of value and lucrative investment. With a market worth over $1 trillion, Bitcoin is considered a significant asset class. Its scarcity and finite nature make it an attractive hedge against inflation and a secure haven during global turmoil. Compared to gold, Bitcoin’s digital robustness makes it a more desirable choice, despite gold having a market value around ten times greater than Bitcoin. Semler Scientific intends to allocate excess cash to Bitcoin as its primary treasury asset, considering market circumstances and future financial requirements.

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2024-05-30 04:29