3 Reasons Bitcoin Failed to Break Above $72,000

Bitcoin (BTC) posted a 5.9% gain between June 2 and 5, but the rally stalled at $71,746. This activity was supported by nearly $1 billion in US-listed Bitcoin spot exchange-traded funds, reflecting strong interest from institutional investors.

Bitcoin's bullish impulse is also fueled by growing unaccounted for losses in the US banking sector. However, despite favorable conditions, including a more crypto-friendly stance from US lawmakers, Bitcoin failed to break above $72,000.

Despite positive developments, regulatory uncertainty continues

According to Bitwise Chief Investment Officer Matt Hogan, regulatory uncertainty has hindered financial advisors from increasing their crypto exposure. Still, Hugan believes the US is moving toward regulatory transparency, a shift that comes as Democrats voted to repeal the US Securities and Exchange Commission's (SEC) Staff Bill 121.

The SEC's approval of spot Ethereum ETFs is another sign that U.S. regulators are less willing to pick up on anti-crypto disputes after several court losses, including the conversion of Greyscale's GBTC Trust into a regular ETF. However, Joe Biden, the US president of Bitwise Hugan, said that vetoing the repeal of SAB 121 “shows that crypto still has a long way to go.”

According to a report by the Federal Deposit Insurance Corporation (FDIC), US financial institutions are currently experiencing losses of $517 billion due to the impact of high prices on their mortgage-backed securities. The report, published on May 29, states that 64 banks are on the brink of bankruptcy in the first quarter of 2024.

Bitcoin's price may drop ahead of negative macroeconomic events.

BitMEX co-founder Arthur Hayes argued that the most likely fix is ​​”printing more money,” which is particularly favorable for rare assets like Bitcoin. In Hayes' view, Bitcoin's 43% bull run that began in March 2023 was fueled by the collapse of Silicon Valley Bank and Silvergate Bank within 30 days. A similar design can be created in 2024.

However, even if this theory is correct, it means that the US Federal Reserve injects liquidity into the system to avoid a general default or to ease the pressure on the banking system through repurchase agreements and special lines of credit. Stock markets and bond markets suffer.

Before starting its rally in March 2023, the price of Bitcoin fell to $19,559, the lowest in two months. The move at the time reflected the same uncertainty that pushed the 2-year U.S. Treasury yield from 5.07% to 3.98%, which is highly unusual and shows traders are willing to cut yields for the safety of government-backed assets. .

Therefore, investors can expect a price correction in the last rally of Bitcoin, although there is no guarantee that the trend from 2023 will repeat itself, especially in the US space Bitcoin ETF has accumulated more than 52 billion dollars in the history of repeated income flows. Since January.

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Stock market success is not inherently positive for Bitcoin.

He should consider the stellar performance of US-listed tech stocks, including NVidia (NVDA), which pushed the S&P 500 index to an all-time high of 5,342 on June 5. As reported by CNBC this year, creating a “healthy background for stocks”.

Although not as competitive as Bitcoin, strong stock market performance reduces the incentives of alternative assets. GameStop's ( GME ) 32% week-to-day pump, fueled by influencers and social media posts about ‘Roaring Kitty' showing a profit of more than $85 million, could negatively affect the trader's demand for the cryptocurrency.

In short, there is nothing holding Bitcoin back from posting a new all-time high in 2024. However, unless investors remain comfortable with fixed income and stock market traders, there is little incentive for a near-term push above $71,000.

This article is not intended for general information purposes and should not be construed as legal or investment advice. The views, ideas and opinions expressed herein are solely those of the author and do not necessarily represent the views and opinions of Cointelegraph.