Bitcoin Price Reaches 70K,Why Is Bitcoin (BTC) PRICE UP?

Bitcoin (BTC) price has surged past $70,000 as investors anticipate further monetary expansion from the Federal Reserve. Despite this growth of more than 4%, several macroeconomic headwinds persist, which could impact Bitcoin's future trajectory. What is next for Bitcoin, a new target or support level?

Why is Bitcoin (BTC) price up?

As of now, Bitcoin (BTC) is trading around $69K reflecting a recent surge in price. This is the first time it has closed above $68,000 since April 11, despite fluctuating above $67,000 multiple times in the last five days. Bitcoin gained more than 4% on May 20, yet it still needs a 5% increase to hit its all-time high. In contrast, gold reached a record high of $2,450, and the S&P 500 index peaked at 5,325 points, highlighting a diverse market performance.

Bitcoin's 51% year-to-date gain mirrors investors' expectations of a U.S. monetary expansion. With the Federal Reserve injecting liquidity to support both the banking sector and the broader economy, investors are gravitating towards scarce assets like Bitcoin. The potential for an economic recession further drives this trend.

The U.S. monetary base (M2) expanded beyond $21.0 trillion in April 2024, up from $20.8 trillion in May 2023, ending a contraction period that began in April 2022. This increase indicates rising inflationary pressures, despite current spending hesitations by businesses and individuals.

However, continued liquidity injections are not guaranteed if inflation remains a significant concern. The Federal Reserve might lower interest rates while also implementing measures like increasing bank reserve requirements to control economic growth and achieve a "soft landing," avoiding a recession post-high interest rates.

What is the impact of the new SEC request concerning ETH spot ETF on BTC?

With SEC recent request to exchanges to "Update 19B-4 filings For Spot Ethereum ETFs" and as the decision on Ethereum's spot ETF's due date is set for May 23rd, in less than 48 hours, the market is in turbulence and all cryptos are significantly up or down. Among the top performers today is Ethereum (ETH), with an increase exceeding 17% and a price exceeding $3,500.

Additional factors like external economic ones, particularly the weak global real estate sector, are also influencing Bitcoin's price. On May 17, Chinese authorities announced a $42.2 billion intervention to support the troubled real estate market. 

The risk of an economic crisis extends beyond China. Barry Sternlicht, CEO of Starwood Capital Group, noted on May 15 that commercial real estate faces a balance sheet crisis, with borrowers struggling to refinance due to rising interest rates. This could lead to failures among North American regional and community banks, adding to economic instability.

What happens to BTC in an economic crisis?

Despite the potential benefits of Bitcoin during an economic downturn, its adoption remains limited. Bitcoin is not yet a mainstream closed-loop economic system or widely accepted means of exchange, leading investors to view it more as a risk-on asset rather than a primary hedge.

How can Grayscale, Genesis, and Digital Currency Group affect BTC price?

In addition to the previous internal and external factors, some concerns about Grayscale's holding firm impact Bitcoin. On May 20, Michael Sonnenshein, CEO of Grayscale, announced his resignation. Grayscale's parent company, Digital Currency Group, was affected by the January 2023 bankruptcy of Genesis, its crypto lending and trading business. Investors worry that liquidating part of the $19.4 billion Grayscale Bitcoin Trust (GBTC) could negatively affect Bitcoin's price.
 

Bitcoin's recent price surge past $70,000 reflects investor optimism about future monetary expansion. However, ongoing macroeconomic challenges and internal market dynamics pose significant risks to its continued growth. Could Bitcoin (BTC) continue to reach back $65K or will it stay at $69K?