(Kitco News) – Bitcoin (BTC) bulls are attempting to stave off bearish attempts to pound BTC price back below $70,000 in early trading on Wednesday following Tuesday’s spike above this psychologically important support level.
After reaching a high of $71,385 in the early morning hours, King Crypto briefly dipped to $70,385 before a bullish resurgence pushed it to a new daily high of $71,615.
BTC/USD Chart by TradingView
At the time of writing, Bitcoin trades at $71,465, an increase of 2.1% on the 24-hour chart.
Stocks popped out of the gate, propelled higher by hesitant optimism that the first rate cut could come in September. The source of Wednesday’s momentum was the release of the ADP private payrolls report, which provided the latest evidence that the U.S. labor market is cooling as private-sector growth for May came in below estimates.
But traders are likely to remain cautious about interest rates until the key monthly jobs report is released on Friday. The CME FedWatch tool shows that roughly 65% of traders now expect Fed officials to reduce the benchmark rate at their September meeting, compared with less than 50% a week ago.
Bitcoin is now trading less than 5% below its all-time high near $74,000, and with flows into U.S.-listed spot BTC exchange-traded funds (ETFs) on the rise, many analysts think a new record high is on the horizon.
“Bitcoin is within touching distance of the highest price it has ever reached - the $73,000 it traded for back in March,” said Neil Roarty, analyst at Stocklytics. “So, what’s behind the bullish sentiment?”
“The most immediate driver looks to be Bitcoin ETFs, which launched in the US back in January, introducing a new wave of institutional investors to cryptocurrency,” he said. “On Tuesday, these ETFs accounted for $880m in Bitcoin in-flows, suggesting demand is on the rise. It was the best day of in-flows since March.”
“The question now is whether these institutional investors will remain bullish. That will be closely linked to interest rates,” Roarty said. “If we see cuts sooner rather than later, the strong returns Bitcoin has been delivering lately could look even more appealing versus more traditional – and perhaps safer – investments. As always seems to be the case with Bitcoin, the only guarantee is that we’re in for an unpredictable ride.”
According to Peter Eberle, President and Chief Investment Officer of Castle Funds, Bitcoin’s wild ride will likely start to smooth out as time progresses and BTC climbs to $500,000 over the next decade.
“As BTC continues to mature as an asset class the volatility will decline,” Eberle said in a note to Kitco Crypto. “The extreme overreach in bull markets and the extreme crashes of bear markets may well be behind us. Yes, there will still be bull markets and bear markets but the days of -80% may no longer occur.”
At this point, Eberle said they are no longer focused on the “peaks or troughs of 2-4 years cycles,” and are instead “focused on the longer term and believe that the market cap of BTC will exceed that of gold in the next decade.”
“At current prices that would put BTC above $500,000 by 2034,” he said.
But there will be plenty of headwinds on that journey, he noted, including an unfriendly U.S. regulatory environment that will take time to soften.
“The current U.S. administration is not crypto-friendly, and they could continue their aggressive campaign against the industry,’ he warned. “However, regardless of what happens in the Presidential election, we believe that younger members of Congress will continue to migrate to a more pro-crypto stance which will create a tailwind for BTC."
