Will the upward trend in Bitcoin's value exceed $100,000 and sustain its surge?
Cryptocurrency titan, Bitcoin, has broken through the $100,000 ceiling yet again, spurred on by easing trade tensions. But will this spell a lasting rally or just a temporary fling? Let's dive in.
Penned by Quentin Bas Lorant, our investment journalist at site.fr, we explore the ups and downs of this latest surge.
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Scaling new heights? On Thursday, May 8, Bitcoin breached the psychological $100,000 mark and pushed further to $103,000 on Friday, May 9. This milestone last saw Bitcoin back in late January, when it reached its record high around $105,000 following Donald Trump's inauguration. The rebound largely comes down to a broader relief: "Market tensions and stress, including on cryptos, have eased in recent weeks," states Laurent Ovion, director of innovation at DLPK.
Bitcoin's price rally appears to rejoice the trade agreement that went down, Thursday, May 8, between the United States and the United Kingdom. A baby step towards reversing the global increase in tariffs announced by Donald Trump on April 2, which caused Bitcoin to plunge to $75,000 in a week's time. This dip offered an opening that some "shrewd actors" took advantage of, as Ovion suggests. As a consequence, "this buying pressure is starting to be felt and contributes to the current rally," the expert shares.
So, will this be enough to fuel Bitcoin's upward spiral in the long run?
But will this be enough to sustain Bitcoin's upward swing in the long run? According to Ovion, hitting levels close to the all-time high could trigger profit-taking, which could potentially deflate the rally: "Short-term traders are finding opportune moments to sell, especially those who entered around $96,000." However, the long-term investors may choose to hold onto their Bitcoins, with the idea that this could be the final chance to acquire them under $100,000.
Aside from short-term traders' play, two indicators will be vital for Bitcoin's price direction until the end of the year, according to Ovion. First, the money supply: "If the Fed starts lowering rates and returning to accommodative policies, this could mechanically favor Bitcoin in the second half of the year." Indeed, when rates fall, the yield on risk-free investments lessens, causing liquidity to typically flow towards riskier assets, like Bitcoin.
The second pointer to watch will be the moves from states or companies initiating strategic Bitcoin reserves, as two American states did this week: Arizona and New Hampshire. Alongside granting more legitimacy and potential value to cryptoassets, these decisions "lower the available supply and exert upward pressure on prices," Ovion concludes.
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- The trade agreement between the United States and the United Kingdom has contributed to the recent surge of Bitcoin's price, but it remains unclear if this will sustain its upward swing in the long run.
- An important indicator for Bitcoin's price direction until the end of the year could be the money supply, with lower rates potentially favoring Bitcoin due to the increase in liquidity towards riskier assets.
- The moves from states or companies initiating strategic Bitcoin reserves, such as Arizona and New Hampshire, could potentially lower the available supply and exert upward pressure on Bitcoin's prices.
- Long-term investors may find this an opportune time to hold onto their Bitcoins, as they see it as a final chance to acquire them under $100,000.
