Bitcoin
BTC Summer 2024: Analyzing Market Trends and Future Drivers
Bitcoin is currently in a lull between narratives. The excitement, speculation, and rapid pace of inflows from the ETF launch have subsided. There isn’t much good news on the horizon, perhaps until the US election in November. In the meantime, it seems that BTC is mainly facing crypto and macro headwinds.
In June, BTC nearly hit all-time highs before higher-than-expected nonfarm payrolls data sent prices tumbling to $58,000 despite lower inflation numbers. The start of Mt. Gox’s $9 billion BTC distribution and the sale of seized BTC by the German government sent BTC as low as $54,000, but it has now recovered to the low 60,000s. Once Mt. Gox’s distributions are completed in the coming months, it will remove significant price risk. Despite these negative factors, BTC has shown resilience. The next potential catalyst is the approval of an ETH ETF. With less liquidity than BTC, strong inflows could push ETH higher, although a BTC-like oversupply could occur.
Politically, we’ve seen Donald Trump include positive comments about BTC and digital assets in his regular campaign speech, taking an “America First” stance aimed at keeping jobs and wealth here in the US. If Trump is re-elected, the price of BTC will likely benefit (although the shape of the Trump Administration’s policy on digital assets is unclear). It’s possible we’ll see speculative buying leading up to Election Day as well — a positive narrative on the horizon.
Finally, we saw several major central banks cut rates in June, including Canada and the EU. As one of the biggest correlates of BTC price is the global market M2 LiquidityThese rate cuts suggest that the trend of increasing global liquidity is moving in a beneficial direction.
In early June, BTC nearly reached all-time highs before tailwinds pushed it to the lows of the June range. Despite the lower-than-expected PPI, the market showed signs of buyer fatigue. Mt. Gox later announced BTC distributions to creditors in July, and the German government sold seized BTC, causing prices to fall below $60,000. ETH remained more resilient but still below its May ETF rally.
BTC currently lacks a clear narrative, with only negative events on the horizon, giving buyers little to rally behind. In contrast, ETH is anticipating the launch date of its ETFs, which should generate excitement in the market due to its lower liquidity compared to BTC. Many predict an ETF S-1 approval sometime in July, which could spark interest and demand. Investors will also be watching to see whether altcoins and BTC rally alongside ETH.
On the political front, Trump continues to speak out positively about BTC and crypto in their campaign speeches while Biden remains largely silent on the subject. Later this month, BTC 2024 takes place in Nashville, with several politicians in attendance, including Donald Trump. This venue would offer a sensible place for a candidate to announce important positions on the topic of digital assets.
Please note: The opinions expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates.