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Cryptocurrency News Articles
Bitcoin (BTC) Price Rallies to Reclaim $65K as US Stock Market Hits New All-Time High
Sep 27, 2024 at 05:42 am
Some market analysts believe that Bitcoin's path to $70,000 has been reinforced by macroeconomic trends, including lowered interest rates in the US
Bitcoin ( BTC ) price dropped to $62,705 in the early hours of Sept. 26, causing bulls to temporarily lose hope after the third rejection at the $64,000 resistance level in just four days. However, the tables turned as the United States stock market opened, showing the S&P 500 index at a new all-time high. Bitcoin soon followed, gaining over 3% to reclaim the $65,000 level.
BTC price 1-hour candle chart (Binance). BTC/USD.
Some market analysts believe that Bitcoin’s path to $70,000 has been reinforced by macroeconomic trends, including lowered interest rates in the US and renewed interest from long-term institutional investors. Notably, fears of a stock market bubble have been fading after signs of robust economic growth paired with U.S. housing prices reaching an all-time high.
Rally in tech stocks, monetary policy changes impact investor sentimentThe technology sector has been the main driver of global stock market gains, with several companies achieving over 30% gains in the last six months. Some notable companies include Alibaba, Tesla, Nvidia, Taiwan Semiconductor and Apple. Michael Matousek, head trader at U.S. Global Investors Inc., told Bloomberg:
“The tech sector is really driving the market right now. We’re seeing a lot of interest from institutional investors in anything to do with artificial intelligence.”
On Sept. 24, Lyn Alden, an investment researcher and the founder of Lyn Alden Investment Strategy, highlighted that Bitcoin is the most correlated asset with changes in the global monetary base (M2). According to the analysis, Bitcoin price increased in 83% of cases over a 12-month period when liquidity was added to bank deposits and circulating money. In comparison, gold followed M2’s direction in just 68% of the previous 10 years.
“This data is favorable for Bitcoin, especially as governments begin deploying stimulus measures after an 18-month hiatus, but it also benefits the stock market. The S&P 500 index shows an 81% correlation with changes in the monetary base, according to the study.
Bitcoin price (BTC/USD) vs. global M2 supply, trillions. Source: BGeometrics
The favorable momentum in the U.S. stock market on Sept. 26 was largely driven by memory chip supplier Micron, a critical player in the artificial intelligence supply chain. Micron raised its quarterly revenue guidance to $8.9 billion, up from a previous estimate of $8.5 billion. The company predicts that demand for chips used in AI data centers will increase fivefold by 2025, providing a degree of reassurance for investors, particularly those heavily reliant on the tech sector.
Bitcoin looks less riskyFurther boosting investors’ risk appetite was the third estimate of U.S. gross domestic product growth for the second quarter, which came in at 3%, according to Yahoo Finance. This supports expectations of a 2.9% annualized growth rate for the third quarter. Additionally, China’s newly announced economic stimulus measures resulted in the largest weekly surge in the CSI 300 stock index in over a decade.
However, the most significant recent development affecting Bitcoin’s momentum was the $242 million inflow into spot Bitcoin exchange-traded funds (ETFs) over just two days. Investors had been skeptical that institutional demand would gain traction, especially after BlackRock’s iShares Bitcoin Trust ETF saw only $5 million in inflows since its launch on Aug. 27, based on Farside Investors data.
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