What’s Behind Bitcoin’s Recent Rally?

Bitcoin price has rallied to the $70,000 mark, indicating a potential bull market. Analysts believe that the majority of on-chain indicators point to a nascent bull market, despite some showing topping patterns. The recent support bounce near $60,000 has sparked increased interest, with Farside Investors reporting approximately $950 million in inflows last week.

If this trend continues, BTC could potentially exceed expectations, with the 20-day EMA at $64,371 and a positive RSI indicating an upward breakout is more likely. Overcoming the $68,000 resistance suggests that BTC price is on the path to $73,777, though this level may trigger a strong bearish response. Conversely, a break below the moving averages could signal a bearish downturn, with potential drops to $59,600 and $56,552.

In the broader economic context, Bitcoin’s 51% year-to-date gain is reflective of investors’ anticipation of U.S. monetary expansion, which saw the M2 monetary base surpass $21.0 trillion in April 2024. This increase in circulating money hints at rising inflationary pressures despite a period of spending hesitancy by companies and individuals. The United States Fed’s strategies to manage inflation and avoid a recession could impact the liquidity and attractiveness of scarce assets like Bitcoin.

Exchange BTC reserves have plummeted to a seven-year low, with CryptoQuant data showing only 1,918,417 BTC available on major trading platforms as of May 19, a significant decrease from the previous year. This scarcity, coupled with the recent halving event that has halved the potential new supply from miners, makes a bearish stance on Bitcoin increasingly difficult to justify.

Analysts increased their odds of a spot Ethereum exchange-traded fund (ETF) being approved in the US to 75%, resulting in Ethereum (ETH) leaping 8.3% after the news. The first deadline for an ETF approval is on May 23, when the SEC must decide on VanEck’s Ethereum ETF filing.

Cryptocurrency prices on May 20, 2024, were influenced by various factors. Market sentiment and news flow played a significant role in determining the price of Bitcoin (BTC), which tends to lead the overall market.

Significant movement in BTC often affects other cryptocurrencies, and specific events related to Bitcoin on that day, such as institutional investments, halving discussions, or macroeconomic factors, could have influenced BTC prices.

Ethereum’s ecosystem growth played a crucial role in determining ETH prices. Notable DApps, DeFi projects, and NFT platforms launched or upgraded on Ethereum around that time could impact ETH prices. Any progress on Ethereum 2.0, such as the PoS transition and scalability improvements, would have been closely monitored by investors. Technical analysis was also essential for predicting short-term price changes.

Global events and macro factors can spill over into the crypto market, such as concerns about inflation, currency devaluation, or economic instability. Network upgrades and gas fees on Ethereum were persistent issues, and any progress on reducing fees (layer-2 solutions or Ethereum 2.0) could have impacted ETH prices.

Additionally, other networks like Binance Smart Chain or Solana made strides in scalability or adoption, which might have affected investor preferences. Cryptocurrency markets are highly volatile, and multiple factors interact to determine prices. Specific events on that particular day would have shaped market sentiment, so it is crucial to consider a holistic view when analyzing crypto prices.