The crypto market is abuzz as Bitcoin surpassed the $70,000 mark on Tuesday, driven by improving risk appetite and significant inflows into U.S. spot Bitcoin ETFs. Analysts hint at the possibility of new highs this week, especially if weak US economic data continues to support the case for Federal Reserve rate cuts.
Recent data revealed a contraction in U.S. economic growth, with declines in manufacturing and construction spending despite slight improvements in the job market. This economic backdrop is influencing the Federal Reserve’s stance, with expectations of maintaining current interest rates in June and July, and potential cuts in September.
U.S. spot Bitcoin ETFs experienced their second-largest net inflow of $887 million yesterday, led by Fidelity Wise, BlackRock, and ARK 21Shares. This surge in inflows reflects the growing interest in Bitcoin ETFs not just in the U.S., but also in markets like Hong Kong and Australia. Menon added, “With long-term holders ending their sell-off, Bitcoin exchange funds saw net inflows of $148 million last week, while Ethereum attracted $33.5 million.” The CoinSwitch Markets Desk highlighted the sustained bullish sentiment in the market, noting that Bitcoin ETFs have seen 15 consecutive days of net inflows. “BlackRock’s iBit now holds over $20 billion in assets under management, with $2.4 billion added in the last month alone, making it the third-largest inflow in the entire ETF market,” the report stated.
Broader movements Bitcoin’s surge has had a ripple effect across the crypto market. Binance’s native token, BNB, reached an all-time high after gaining more than 11 percent, following news that former CEO CZ started his jail term in California. Additionally, Telegram’s TON coin also hit an all-time high, with its native token NOT quadrupling in value within two weeks of listing.
Ethereum, while experiencing a slight uptick, continues to underperform compared to Bitcoin, currently trading above $3,800. Despite this, most altcoins are showing signs of recovery and positive movement.
Bitcoin could break past $100,000 by the end of this year as political roadblocks come down, Galaxy Digital CEO Michael Novogratz told Bloomberg TV. “If we take out $73,000 in the next week or so, we’re gonna end the year at $100,000. Somewhere around there or even higher,” the crypto enthusiast said on Tuesday. That indicates a 40% gain from Wednesday’s price of $71,500.
Novogratz highlighted two factors catalyzing a fresh rally for Bitcoin: more regulatory clarity and the Federal Reserve’s movements. “More regulatory clarity, which I thought was a low probability at that point, and/or the Fed starting to move. We’re getting the regulatory clarity,” he said. “And even though it’s not perfect, we got enough that people now realize this is coming.” Although it remains a developing tailwind, there are clear signs that the government is changing its tune toward the industry.
Last month, the Securities and Exchange Commission surprised markets by approving spot ether exchange-traded funds with no hassle or pushback. Meanwhile, Wisconsin’s purchase of around $163 million worth of Bitcoin ETF shares last quarter demonstrates that even institutions and pension funds are embracing digital assets, Novogratz said.
But an “unbelievable positive” is actually happening on Capitol Hill, where Democrats are less inclined to treat crypto as a political issue, he noted. Although not every party member has been anti-crypto, he said that a select few legislators have led the party’s hard stance against such currencies. But now, this is changing with lobbying, and as crypto plays a larger role in election funding. “The scale has gotten bigger. That’s why the Democrats woke up. There’s been about $150 million on its way to $250 million in these crypto Super PACs,” he said.
As for the election, former president Donald Trump would seem a better fit for the industry, given his early embrace of the space, he said, but it will matter less who becomes president in the long run, given that pro-crypto rhetoric is becoming increasingly bipartisan, he argued.
As political obstacles clear, Novogratz expects it will lead to legislation that can spur crypto upside. For instance, if the Financial Innovation and Technology for the 21st Century Act, known as the FIT21 bill, gets approved, that would allow big banks to pursue sales and trading of crypto, attracting a fresh wave of institutional funding, he said. The proposed law looks to create a comprehensive regulatory framework for the US digital asset market.
