Despite testing the $65,000 support on June 14, Bitcoin (
BTC
) has managed to stay above $66,000 since May 17. Although BTC faced resistance at the $72,000 level over the past four weeks, recent events have boosted regulatory sentiment and highlighted the limited room for maneuver by the U.S. central bank without risking inflation. Positive market conditions and resilience in Bitcoin derivatives metrics suggest that any potential downside is minimal.
There is a gradual shift in Washington towards a more favorable stance on crypto. On May 16, U.S. lawmakers passed a Congressional Review Act to investigate an SEC rule that mandates listed companies, including banks, to account for crypto assets as both assets and liabilities on their balance sheets. Senator Cynthia Lummis hailed this as a significant milestone, marking the first standalone crypto legislation approved by Congress.
Although the resolution was later vetoed by President Joe Biden, the defiance from Democrats underscores the growing influence of crypto participants in U.S. politics. Craig Warmke, a fellow at the Bitcoin Policy Institute, noted that the banking sector has an economic incentive to offer custody services for cryptocurrencies, as they seek to capitalize on the ongoing crypto adoption. Daniel McCabe, chief compliance officer of Flexa, believes that pro-crypto lobbies and the banking industry could have a considerable impact.
Perianne Boring, founder and CEO of the blockchain trade association Digital Chamber, described the Democrats’ support as a pivotal moment for the Biden administration. Boring highlighted that Senator Schumer’s backing is shifting the tide in favor of crypto in Washington. Biden faces a decision on whether to veto the H.J.Res. 109, which could potentially spark internal conflicts within the Democratic party.
The Federal Reserve is under pressure to reverse its tightening monetary policy soon. Inflation remains stubbornly above the Fed’s 2% target, with the Consumer Price Index (CPI) at 3.4%. The slight increase in unemployment, coupled with concerns about future economic growth, has led to a decline in the U.S. 2-year Treasury yield. The S&P 500 reached record highs as investors turned to equities and other scarce assets to hedge against inflation and low bond returns.
Despite a recent 8.5% drop in Bitcoin’s price between June 6 and June 14, its primary derivatives metrics showed no significant changes. The Bitcoin 2-month futures premium remained above 10%, indicating a bullish market sentiment. With no signs of stress or excessive demand for short leverage in the derivatives market, the $65,000 support level is likely to hold strong amidst current regulatory and economic trends.
This article is intended for informational purposes only and should not be construed as legal or investment advice. The opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.