The Bitcoin price has been fluctuating around the $64,000 level in response to the latest US inflation data, which showed an increase in the Core PCE index in March. This rise in inflation is above the Fed’s 2% target, indicating ongoing high inflation in the US, particularly driven by housing and utility costs. The high inflation rate may prompt the Fed to keep interest rates elevated for longer, which could present a headwind for Bitcoin. Historically, Bitcoin has performed better in an environment of falling US yields and a weakening US dollar, which is not the current situation.
Despite recent macroeconomic challenges and slowing ETF flows, Bitcoin has maintained its range between $60,000 and $74,000. Although there have been outflows in some Bitcoin ETFs, stablecoin growth has remained strong and could indicate continued inflows into the crypto market. The stablecoin market cap is at its highest level since June 2022, with significant growth over the past few months. However, any decline in stablecoin growth could lead to a decrease in the Bitcoin price. Bitcoin is currently at risk of falling below its range of $60,000, potentially dropping to the $53,000 support level.
In the long term, many believe that Bitcoin will enter a bull market despite short-term fluctuations. The recent quadrennial halving, which reduced the issuance rate of BTC, has historically driven the price to new all-time highs. This time, Bitcoin reached all-time highs before the halving due to ETF demand, which could result in a post-halving correction. However, the long-term outlook for Bitcoin remains positive, with increased traditional finance adoption and investment in the asset, facilitated by the availability of ETFs. Additionally, global currency debasement is expected to continue, positioning Bitcoin as a beneficiary as it is increasingly viewed as “digital gold.”
Furthermore, Bitcoin’s technological adoption continues to increase globally, with more people recognizing the benefits of decentralized, censorship-resistant, and borderless payment technology. Crypto firms are continuously developing centralized and decentralized platforms, enhancing Bitcoin’s utility and accessibility. Bitcoin is expected to challenge the $100,000 mark in 2024 or 2025, supported by its long-term bullish thesis. While the current environment presents challenges, such as high inflation and cautious Fed policies, the overall trajectory for Bitcoin remains positive due to increased adoption, macroeconomic tailwinds, and the continued development of the crypto industry. Investors should be aware of the high-risk nature of the crypto asset class and conduct thorough research before making investment decisions.
