It was another day of consolidation for the cryptocurrency market as Bitcoin (BTC) continued to hover around support at $43,000, almost exactly in the middle of the range it has been trading in since Dec. 4.
The price action for stocks was also subdued as multiple Fed representatives repeated Powell’s message that interest rates could stay higher for longer, giving investors reason to pause before putting more money to work in the markets.
Cleveland Fed president Loretta Mester said “It would be a mistake to move rates down too soon or too quickly without sufficient evidence that inflation was on a sustainable and timely path back to 2%.” That said, she also believes the central bank “will gain that confidence later this year, and then we can begin moving rates down,” once the economy improves as expected.
Minneapolis Fed President Neel Kashkari said that while recent inflation data have been surprisingly positive, the Fed is “not all the way there yet” when it comes to tackling higher prices.
At the closing bell, the S&P, Dow, and Nasdaq all finished in the green, up 0.23%, 0.37%, and 0.07%, respectively.
Data provided by TradingView shows that Bitcoin rallied from support at $42,600 in the early hours on Tuesday to hit a high of $43,375 in the afternoon, and has since pulled back to $43,100, where it trades at the time of writing.
BTC/USD Chart by TradingView
According to analysts at Bernstein, Bitcoin will soon resume its upward trajectory and is expected to surpass its previous all-time high of $69,000 before the end of 2024, which would represent an increase of 65% from its current price.
The analysts highlighted five potential catalysts that could lead to this result. First and foremost was the recent launch of 11 spot BTC ETFs.
“In a commodity with a known finite supply curve, any incremental buying demand at this scale will become material to price,” analysts Gautam Chhugani and Mahika Sapra said in the note. “ETFs are still 3.5% of total supply, and more than 12% of Bitcoin still sits on exchanges, but it is the net incremental demand that counts given the sell pressure is easier to model.”
They noted that the adoption of ETFs by national financial advisor networks is growing, according to reports from top ETF providers, which is the second catalyst.
The third is the continued growth of the U.S. crypto mining industry, which is expanding in scale and has recently shown increased financial stability.
“We expect 15% of high-cost miners to cut production in the coming halving, but we expect the low-cost and competitive miners to gain relative share (RIOT and CLSK are our preferred picks),” they said.
The launch of a functional layer-two network, expected in Q424, was the fourth catalyst highlighted. This will increase the efficiency of transacting on the network, thereby reducing the cost of peer-to-peer (P2P) BTC transfers on-chain and the use of the Bitcoin as collateral for lending and decentralized finance (DeFi) activities.
“We also expect Layer 2s to continue to drive transaction revenues for the miners and economic activity from token mints and NFT ordinals to sustain, as the Bitcoin developer ecosystem grows,” the analysts said.
The final catalyst is a favorable macro landscape, with the potential for rate cuts boosting the outlook, while cryptos have historically performed well during election years in the U.S.
“If the early election trends suggest a change of regime post elections and with potential changes in the current (crypto unfavorable) leadership at SEC, Bitcoin and the broader crypto market could rally off those cues, and the rates could add further fuel to the rally,” they said.
Touching on Bitcoin’s sideways trading near $43,000, the analysts said the current price range represents a “no-regrets price with asymmetric upside.”
Token airdrop excites crypto traders
The top 200 altcoins traded mixed on Tuesday with a majority of tokens recording gains.
Daily cryptocurrency market performance. Source: Coin360
Dymension (DYM) led the field with a gain of 40% on a positive day of trading after the project airdropped millions of tokens to early adopters. Chromia (CHR) was the second-leading gainer with an increase of 19.1%, followed by a gain of 18.7% for Nervos Network (CKB). Privacy token Monero (XMR) was hit hard by their Binance delisting, falling 35% to trade at $107.76, while Frax Share (FXS) fell 11.3%, and Helium Mobile (MOBILE) declined 7.7%.
The overall cryptocurrency market cap now stands at $1.66 trillion, and Bitcoin’s dominance rate is 51%.
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