Bitcoin experienced a 5.9% increase from June 2 to 5, reaching a peak of $71,746 before its rally came to a halt. This surge was backed by nearly $1 billion flowing into U.S.-based spot Bitcoin exchange-traded funds (ETFs), indicating a strong demand from institutional investors.
The positive momentum of Bitcoin was also fueled by the substantial growth of unrealized losses within the U.S. banking sector. Despite favorable conditions, such as a more crypto-friendly approach from U.S. lawmakers, Bitcoin (
BTC
) struggled to break the $72,000 barrier.
Regulatory uncertainty remains a challenge despite some positive developments. Bitwise’s chief investment officer, Matt Hougan, noted that financial advisers are hesitant to increase their exposure to crypto due to these uncertainties. However, Hougan believes that the U.S. is making progress towards regulatory clarity, especially after the Democrats voted to repeal the U.S. Securities and Exchange Commission’s Staff Accounting Bulletin 121.
The approval of spot Ether (
ETH
) ETFs by the SEC is seen as a positive step, indicating a shift in the regulatory stance towards crypto assets. However, President Joe Biden’s veto of the SAB 121 repeal suggests that there is still a long way to go for crypto regulation.
A report from the Federal Deposit Insurance Corporation (FDIC) highlighted that U.S. financial institutions are facing $517 billion in accounting losses due to higher rates impacting their residential mortgage-backed securities. This report, released on May 29, revealed that 64 banks were on the verge of insolvency in the first quarter of 2024.
Arthur Hayes, co-founder of BitMEX, suggested that printing more money could be a solution to economic challenges, benefiting scarce assets like Bitcoin. He pointed out that past Bitcoin rallies were triggered by financial collapses, and a similar trend could occur in 2024.
While Bitcoin’s price may experience fluctuations ahead of negative macroeconomic events, investors should be prepared for a potential price correction before a significant rally. Despite uncertainties, the consistent inflows into U.S. spot Bitcoin ETFs indicate strong investor confidence in the cryptocurrency market.
The performance of U.S.-listed tech stocks and the overall stock market may impact investor interest in Bitcoin. A strong stock market performance could reduce incentives for alternative assets like Bitcoin. Despite these factors, Bitcoin could still achieve new all-time highs in 2024, provided investors remain comfortable with existing investment options.
It is important to note that this article is for informational purposes only and should not be considered as legal or investment advice. The opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.