Bitcoin price rises: A look at possible reasons

The price of Bitcoin (BTC) rose 7.6% between April 6 and 8, reaching an intraday peak of $72,747, sparking widespread speculation about its underlying cause.

While some may point to inflows into spot Bitcoin exchange-traded funds (ETFs) as the main factor, a range of macroeconomic factors or halving expectations also likely played a major role.Crypto intelligence company Santiment said Trader activity continues to increase It remains to be seen whether this will continue after the halving event, which is expected to occur on April 19.

📊 #bitcoin #ETF Trading volumes haven’t slowed down after four weeks Bitcoin USD #AllTimeHigh.among $GBTC, $IBIT, $FBTC, $ARKB, $BTCO, $BITBand $HODLtrader activity remains significantly higher than the turning point that began in late February when individual trading began to pour in… pic.twitter.com/LErr5T8BWF

— Santiment (@santimentfeed) April 7, 2024

It seems unlikely Ethena buys $500 million in Bitcoin Given Bitcoin’s high daily spot trading volume, its USDCe stablecoin collateral is the only driving factor. Instead, investor expectations about the economy and the cost of capital may be more important. Periods of increased liquidity and stimulative monetary policy tend to benefit scarce assets like Bitcoin, especially during periods of sustained inflation.

USDe has seen unprecedented growth since its launch, with Ethena hedges accounting for approximately 20% of ETH open interest as of now

Ethena can use $25 billion of BTC open positions for delta hedging at any time, and USDe’s expansion capacity has increased by more than 2.5 times pic.twitter.com/glyvBQFEwj

— Ethena Labs (@ethena_labs) April 4, 2024

different opinions

JPMorgan CEO Jamie Dimon recently warned that the resilience of the U.S. economy could lead to higher-than-expected inflation and interest rates. This helps explain the premium in China gold ETFs as investors brace for inflation over concerns about U.S. fiscal debt, which have been exacerbated by recent government spending plans.

The banker’s comments come after Goldman Sachs chief investment officer Sharmin Mossavar-Rahmani claimed that Bitcoin is not considered an investment asset class and that the bank does not believe in cryptocurrencies. He said:

If you can’t assign a value, then how can you be bullish or bearish?

While some may argue that these dynamics are inherently negative for Bitcoin, as inflation eats into disposable income and rising U.S. debt threatens to trigger an economic downturn, it’s difficult to argue given Bitcoin’s fluctuating correlation with stocks and gold. Predict how investors will react. Escalating trade tensions between the United States and China may also have boosted interest in Bitcoin and gold as hedging tools.

Notably, gold prices hit a record $2,354 on April 8 despite rising U.S. Treasury yields, breaking their typical inverse relationship. On the same day, Treasury Secretary Janet Yellen said the United States may impose tariffs on subsidized Chinese clean energy products and noted that other countries may also restrict trade with China.

I wouldn’t rule anything out at this point. We need to put everything on the table. We want to work with the Chinese to see if we can find a solution. […] We just want to make sure that we don’t get eliminated and that our companies and workers have opportunities in these industries that are going to be important industries for our future.

Against this backdrop, Bitcoin’s surge to $72,000 may reflect investors seeking to hedge against worsening global economic relations and U.S. stimulus measures, rather than being driven primarily by one-time purchases of Bitcoin by some investors. A combination of macroeconomic factors seems to be a more reasonable explanation.