The price of Bitcoin has steadily increased by more than ten thousand dollars from $37,500 to $47,500 in the past two weeks. Earlier today, it topped $48,000. All 2022 losses have been recovered.
Is the bull market back? What were the reasons for this last mini bull run? Will Bitcoin continue to rise in 2022 and set a new all-time high above the $69,000 it hit in November 2021?
We can speculate on a few reasons why investor confidence in Bitcoin has improved.
The Fed raises interest rates
As we covered in the latest crypto news, in mid-March during the FOMC meeting, Federal Reserve Chairman Jerome Powell announced that he would raise interest rates by six basis points, the first rate increase since 2018.
At the time, this pushed the price of Bitcoin to $41,000. The Fed’s move was seen as bullish for financial markets as it combats inflation and eases fears of a recession. Investors have returned to risk on assets like stocks and crypto.
Correlation with stocks
Bitcoin’s correlation with the S&P 500 hit a 17-month high according to Markets Insider, the financial news section of Business Insider. The SPX is now back higher than it was when Russia invaded Ukraine, currently at 4575.
That’s 11% lower than the 2022 lows of 4114 set in late February. Bitcoin also moved back above the point where the dispute started.
Nuclear war averted
So far, the Ukrainian-Russian crisis has not turned into World War III or a nuclear apocalypse. Markets reacted badly the day fighting allegedly took place on or near the site of a nuclear reactor.
This turned out to be fake news. Some alternative reports are also beginning to surface that Russian forces have in fact exercised restraint, including one in Newsweek quoting US intelligence agencies stating that Putin is “To hold onto‘ and ‘causing less damage than it could‘.
No executive order to ban crypto
Rather than moving to outlawing or implementing onerous cryptocurrency regulations, Joe Biden’s executive order on crypto focused primarily on protecting investors and ensuring’sufficient supervision‘.
The Department of Commerce has been tasked with ‘establish a framework to drive and leverage U.S. competitiveness and leadership in digital asset technologies.’ In other words, crypto is here to stay.
Janet Yellen warms up to crypto
Treasury Secretary Janet Yellon has been a detractor of bitcoin and cryptocurrency over the years, saying during the 2018 bear market that she was “not a fan” of bitcoin. Recently, she seems to have warmed up, telling CNBC:
‘I have a bit of skepticism because I think there are valid concerns about it. Some relate to financial stability, consumer and investor protection, and use for illicit transactions. On the other hand, there are advantages to crypto and we recognize that innovation in the payment system can be a healthy thing. Crypto has obviously grown by leaps and bounds, and it now plays an important role – not so much in transactions, but in the investment decisions of a lot of Americans.‘
Terra buys $10 billion in BTC
Terra founder Do Kwon announced on Twitter that he would add $10 billion in Bitcoin reserves as collateral for the project’s US dollar-pegged stablecoin, UST.
News of large institutional projects buying Bitcoin has historically led to bitcoin price increases. The news that Tether (USDT) is backed by reserves had similar positive effects on the crypto markets. Terra native token LUNA pumped 10% today.
Goldman Sachs makes the first OTC bitcoin exchange
Another major institution that was once a crypto detractor, the US investment bank has taken a big step towards digital asset adoption by conducting Bitcoin over-the-counter trading with Galaxy Digital.
A head of digital assets at Goldman Sachs said: “this is an important development in our digital asset capabilities and for the broader evolution of the asset class.”
Sometimes a Bitcoin price move is right in the charts. Bitcoin had been in a sideways trading range for nearly three months, ever since falling below $45,000 on January 5. This $45,000 level then served as resistance four times, on January 13, February 9, February 15, and March 2.
However, Bitcoin continued to print higher lows, not breaking below the first low it set at $33,000. After a retest of $34,300 on a brief wick quickly bought on February 24 by interested buyers, Bitcoin started to turn resistant.
BTC was not rejected for a fifth time and once it broke $45,000 the upward momentum move was explosive. The longer the sideways consolidation, the more impulsive the breakout, both ways – this time the bulls prevailed. The reasons above could be why, or Bitcoin may have just been oversold.
Bitcoin now faces the December 2021 range that lasted an entire month. There is still work to be done to close the HTF candles above this. The key level to break through is the $52,000-$53,000 area, after which there will be little resistance left and a new ATH in play.
In the near term, Bitcoin price could retest the yearly open of 2022, which the crypto exchange said was around $46,200. That might be a good price to buy the dip.
Crypto-assets are a highly volatile unregulated investment product.