Bitcoin has staged an impressive comeback after a challenging start to the month, with the cryptocurrency rebounding from a drop to $56,500 last week to currently trade above $65,000.
This recovery has been driven by a combination of factors, including a weakening U.S. dollar and increased speculation over potential interest rate cuts by the Federal Reserve.
TLDR
- Bitcoin has recovered from last week’s drop to $56,500, currently trading above $65,000.
- Analysts at Bernstein reiterated their prediction that Bitcoin will reach $150,000 by the end of 2025, citing healthy market metrics.
- The recent correction has cleaned up excess leverage on futures contracts, and Bitcoin ETFs have returned to net inflows after a period of outflows.
- Strong overall ETF inflows, new encouragement for corporate treasuries to buy Bitcoin, steady post-halving hash rate, and healthy transaction fees are seen as positive signs for the market.
- The sharp drop in the U.S. dollar following weaker-than-expected nonfarm payrolls data has benefited Bitcoin, with markets pricing an increased chance of a 25 basis point rate cut by the Federal Reserve in September.
Analysts at Bernstein have reiterated their prediction that Bitcoin will reach $150,000 by the end of 2025, citing healthy market metrics and an attractive risk-reward ratio.
They noted that the recent correction has effectively cleaned up excess leverage on futures contracts, while Bitcoin exchange-traded funds (ETFs) have returned to net inflows after a period of outflows.
The analysts also highlighted several other positive signs for the Bitcoin market, including strong overall ETF inflows over the past three months, new encouragement for corporate treasuries to buy Bitcoin, a steady post-halving hash rate, healthy post-halving transaction fees, and subdued prices for Bitcoin mining equipment.
The sharp drop in the U.S. dollar, following weaker-than-expected nonfarm payrolls data, has been a significant benefactor for Bitcoin. Markets are now pricing an increased chance of a 25 basis point rate cut by the Federal Reserve in September, which bodes well for cryptocurrencies as they typically thrive in a low-rate, high-liquidity environment.
However, near-term gains in Bitcoin may be held back by anticipation of more cues on U.S. rates, specifically from upcoming speeches by Federal Reserve officials.
Despite its recent recovery, Bitcoin remains within a trading range seen through most of March and April, with the cryptocurrency fluctuating between $60,000 and $70,000 amid waning hype over the crypto market.
The gains in Bitcoin have also spilled over into other major cryptocurrencies, although these gains were seen slowing on Monday. Ethereum, the world’s second-largest cryptocurrency, rose 2.7% to $3,166.41, while XRP added 1.4% and Solana rose 2.8%. However, Bitcoin remains the primary driver of crypto valuations, accounting for nearly 55% of the overall crypto market capitalization.
