The rise of Bitcoin in the past two years, the first wave was driven by ETF expectations, the second wave was driven by ETF purchasing power, and the third wave was driven by Trump's transactions.
StarEx exchange analysts believe that due to the increase in macro-financial uncertainty, from a technical point of view, Bitcoin has already stepped out of the bear market trend. BitMEX co-founder Arthur Hayes recently published an article pointing out that many IBIT (Bitcoin ETF) holders are hedge funds, who earn higher returns than short-term U.S. Treasuries by going long on ETFs and shorting CME futures. If the decline in Bitcoin prices leads to a narrowing of the basis, these funds may sell IBIT and cover CME futures. Currently, these funds are in a profitable state, and considering that the basis is close to the U.S. Treasury yield, they may close their positions during the U.S. trading session, cash in their profits, and be bearish on Bitcoin to $70,000.
In mid-2023, when the price of Bitcoin was at $20,000, the market heard that BlackRock had applied for a Bitcoin ETF. By January 2024, the spot ETF was officially approved. In the following six months, the ETF spent tens of billions of dollars to hold more than 1 million Bitcoins, pushing the price of Bitcoin to between $50,000 and $70,000. Trump ran for the US presidency, and his friendly attitude towards crypto assets once again pushed the price of Bitcoin from $60,000 to nearly $110,000.
Analysts at StarEx Exchange believe that the market seems to lack more positive news than ETFs and the "Trump deal" at this stage. Despite discussions about Bitcoin as a strategic reserve, South Dakota and Montana in the United States have successively rejected related bills, further dampening market sentiment. In the short term, it is unlikely that the United States will use Bitcoin as a strategic reserve. Therefore, Bitcoin temporarily lacks new upward momentum. If Trump's governing effect disappoints the market, Bitcoin may give up the gains since the "Trump deal."
In addition, the risks of high US stocks also worry the market, and institutional capital is in a wait-and-see mood at this time. So, what other factors may drive Bitcoin up again? StarEx exchange analysts believe that it may be a crisis and depreciation of the US dollar. In recent years, Federal Reserve Chairman Powell has repeatedly mentioned the United States in the 1980s. At that time, due to factors such as the oil crisis and war, the US economy fell into stagflation, the US dollar depreciated, and the stock market did not rise for ten years, but the price of gold rose from about US$40 in 1970 to a high of more than US$800 in 1980. After that, the United States suppressed inflation by raising interest rates strongly, and the economy began to recover after 1983, laying the foundation for prosperity in the 1990s.
Currently, the Federal Reserve is also imitating the policy of the time, trying to support the strong dollar by maintaining high interest rates. However, the market is obviously pessimistic about the dollar, and the price of gold continues to rise. If the US economy enters a recession, the Federal Reserve may have to cut interest rates and start printing money to save the market, causing the dollar to depreciate, which in turn drives the bull market of gold and Bitcoin. However, this process may be long-term.
StarEx exchange analysts believe that another surge in Bitcoin may require the impetus of a depreciation of the U.S. dollar, especially in the context of a U.S. economic recession, the Federal Reserve cutting interest rates and printing a large amount of money. Although this process may take a long time, if a U.S. dollar crisis does occur, it may bring new opportunities for gold and Bitcoin to rise, and this opportunity may be greater.
