Bitcoin Fluctuates Then Bounces Back Above $30.1K as Investors Weigh ETF Outlook and Macro Data
The price of Bitcoin (BTC), the largest cryptocurrency by market cap, stalled for two days on the back of Bitcoin ETF hype.
BTC recently traded around $30,180, roughly where it was 24 hours ago, as investor optimism increased after three financial services groups including BlackRock – the world’s largest wealth manager – applied to launch BTC spot ETFs had. Bitcoin briefly dipped to around $29,575 early Thursday after cryptocurrency custodian BitGo ended its acquisition of rival Prime Trust — rare bad news in an otherwise bullish week — but quickly regained its lead.
In an email to AskFX, Edward Moya, senior market analyst at FX market maker Oanda, highlighted the recent momentum of cryptocurrencies amid growing concerns about central bank actions to curb inflation and its impact on economic growth.
“Wall Street is turning somewhat bearish on global growth prospects as global central bank tightening enters a new phase that suddenly makes cryptocurrencies look a little more attractive,” Moya wrote, although he cautiously suggested cryptocurrencies’ current upswing could ease up.
“Bitcoin needs to push the price higher over the next few days for the buying momentum to kick in,” Moya wrote.
Ether (ETH), the second largest cryptocurrency in market value, followed a similar path to BTC, falling over around the time of BitGo’s announcement However, it then regained ground and recently changed hands near the $1,900 mark, which it hit on Wednesday for the first time since early June. ETH was recently up a few fractions of a percentage point. Most other major cryptos were mostly in the green, although not as impressive as the day before. ADA and DOT, the tokens of smart contract protocols Cardano and Polkadot, are up more than 2% and 1%, respectively.
The AskFX Market Index, a measure of the performance of crypto markets, recently rose 0.2%.
US equity indices were mixed: the tech-heavy Nasdaq Composite and S&P 500 rose 0.8% and 0.2% respectively, while the Dow Jones Industrial Average (DJIA) fell slightly. Investors seemed to ignore the Bank of England’s 50 basis point (bp) interest rate hike, which deviated from recent dovish stance from other central banks. UK inflation remained at a stubbornly high level of 8.7% in May.
Crypto markets also appeared largely unfazed by hawkish comments from Federal Reserve Chair Jerome Powell, who reiterated the bank’s intention to raise interest rates later this year. The Fed halted a more than year-long streak of rate hikes earlier this month. The latest weekly jobless claims report, meanwhile, had little impact on assets, beating expectations by just a few thousand claims.
In an email to AskFX, Bob Baxley, CTO of decentralized finance (DeFi) infrastructure provider, Maverick Protocol, noted a “A narrative shift that is likely to propel the digital asset industry in ways that weren’t on our collective radar just about a week ago.”
“It’s almost certain that a Bitcoin ETF will approve — either by BlackRock or one of the numerous other filings recently filed — and it is clear that a large number of traditional finance heavyweights are seeking exposure to the digital asset industry more broadly.” Baxley wrote, adding that he does too will be interested in seeing how Ethereum performs in the coming months.
“With tremendous developer activity for a growing number of features, there is just so much energy in this ecosystem,” he wrote. “There’s DeFi and NFTs, of course, but also a whole host of new applications and Layer 2s being developed at breakneck speed.”
