As a seasoned crypto investor with several years of experience under my belt, I can’t help but feel a sense of unease as I read about the latest market downturn and the factors contributing to it. Macroeconomic conditions, such as high US dollar and Treasury yields, have taken a toll on Bitcoin and the broader crypto market.
As a researcher studying the cryptocurrency market, I’ve observed that the prices of Bitcoin and other cryptocurrencies have taken a hit recently due to weak market sentiment. This sentiment can be attributed to several macroeconomic factors, including a strong US dollar and high Treasury yields, which are thought to be indicators of stagflation. Although these external pressures continue to impact the crypto market negatively, it’s essential to keep an eye on potential catalysts that could spark a turnaround for Bitcoin.
Top Analyst Points Out 10 Catalysts for Bitcoin Price Recovery
Markus Thielen, the CEO of crypto research firm 10x Research, emphasized the significance of recognizing and responding to catalysts given that nearly all of Bitcoin’s supply (93.8%) has been mined. Furthermore, Bitcoin’s price gains in each cycle have diminished significantly over the years. For instance, Bitcoin yielded a staggering 560x return during 2013, but this figure dropped to just 21x in 2021. Thielen warned that Bitcoin may only generate a 4-5x return in 2022 and that the traditional buy-and-hold strategy might no longer be effective.
1. Fed Monetary Policy Decision on May 1
The Federal Open Market Committee (FOMC) and inflation figures have a substantial influence on Bitcoin’s price trend. Following the latest FOMC meeting, where the Fed chose not to adjust interest rates and hinted at a deceleration of quantitative tightening (QT), Bitcoin’s price surged noticeably.
The upcoming Federal Reserve meeting on May 1st holds significance for both the crypto and stock markets. Jerome Powell, the Fed chairman, may adopt a more aggressive stance (hawkish) during this meeting and indicate that the number of interest rate cuts in 2023 could be less than initially anticipated. The recent surge in US inflation data, as evidenced by the Consumer Price Index (CPI), Personal Consumption Expenditures (PCE), and Producer Price Index (PPI) reports, has fueled these discussions at the Fed table.
The ISM Manufacturing PMI and JOLTS job openings report data released on May 1 can influence investors’ and market participants’ expectations ahead of the Federal Reserve’s interest rate decision scheduled for the same day.
2. Non Farm Payrolls on May 3
The U.S. Bureau of Labor Statistics will reveal the non-farm payroll numbers on May 3rd. A subpar employment report during this announcement could signal the arrival of stagflation. In March 2024, the US economy experienced a significant increase in employment with 303,000 new jobs added, marking the most growth over the past ten months. This surpassed the revised figure from February of 270,000 and contrasted forecasts predicting a 200,000 increase.
According to market predictions, it is reported that the US economy created approximately 243,000 new jobs in April. A robust job market may postpone potential interest rate reductions from the Federal Reserve.
3. PPI Inflation Data on May 14
On May 14th, the Bureau of Labor Statistics is set to reveal the latest update on the Producer Price Index (PPI), which measures the average change over time in the selling prices received by domestic producers for their output. In March 2024, U.S. producer prices experienced a yearly growth of 2.1%, marking the largest increase since April 2023, following a 1.6% rise in February. However, this percentage was slightly below the anticipated 2.2% expansion. With mounting inflationary pressures, the April data is eagerly awaited to provide insight into potential price trends.
4. CPI Inflation on May 15
Inflation, as measured by the Consumer Price Index (CPI), increased at a faster pace in the United States for the second consecutive month, reaching 3.5% in March 2024. This is the highest rate since September and represents a rise from the previous month’s figure of 3.2%. The Federal Reserve closely monitors CPI data to inform its decisions regarding monetary policy.
The inflation data released on May 15th could influence market trends significantly, possibly leading to an upward shift in Bitcoin’s value.
5. SEC Deadline for VanEck’s Spot Ether ETF
The VanEck proposal to launch a Spot Ethereum ETF is currently under consideration by the SEC, with a final decision expected on May 23rd. This ruling could pave the way for other similar Ethereum ETF applications. If successful, the price of Ethereum is predicted to surge past $4,000, potentially leading to a rebound in the altcoin market.
The listing of Franklin’s Ethereum spot ETF on DTCC’s website led to a significant price increase of around 6-8% for Ethereum over the weekend. However, it is unlikely that the SEC will approve a spot Ethereum ETF due to the regulatory body’s previous indifference towards such proposals and their potential implications.
6. ARK’s Spot Ether ETF
The SEC’s ruling on Ark Invest’s proposal for a spot Ether ETF is anticipated on May 24; this may extend until the last possible day for granting approval to such an Ether ETF.
7. Bitcoin Options Expiry
Markus Thielen pointed out that the expiration of $9.4 billion worth of Bitcoin (BTC) and Ethereum (ETH) options acted as a positive influence, potentially contributing to a bullish market bounce. However, the price of Bitcoin experienced a decline on April 26 due to insufficient trading volumes and the release of PCE inflation data. The upcoming significant expirations for Bitcoin and Ethereum options are scheduled for May 31 and June 28 respectively.
8. Bitcoin Volatility Remains Until June
Until the end of June, he expects the price of Bitcoin to continue experiencing significant price fluctuations. The market’s most significant movements may begin following the expiration of the two largest Bitcoin options contracts in May and June.
Based on the data from Deribit, I, as a crypto investor, have noticed that options traders are placing bullish and bearish bets on Bitcoin’s price movement. Specifically, they are anticipating Bitcoin to reach prices above $100,000 by September. On the other hand, they also expect a price drop to around $70-80,000 by December.
9. MicroStrategy Quarterly Earnings Report
As a researcher, I’d rephrase it this way: MicroStrategy is set to release its first-quarter earnings report after the stock market concludes trading on April 29. The MSTR stock price finished the week at $1,282 before dipping 2.38% to $1,248 during pre-market hours on Monday.
Should MicroStrategy implement FASB accounting regulations, which take effect from January 1 of the coming year, this decision could substantially increase its stock value and earnings.
10. MicroStrategy in S&P 500
If MicroStrategy adopts new accounting methods, it may become a strong contender for inclusion in the S&P 500 index, which is typically reviewed and updated around June 1st. The company’s market capitalization currently exceeds $15.8 billion, while more than half of its shares are publicly traded, satisfying the other two prerequisites.
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2024-04-29 14:28