Bitcoin (BTC) Price Surge: Reasons Behind the Uptrend and Impact on Altcoins

• Bitcoin (BTC) price has made a dramatic comeback, defying recent struggles and surging by an impressive 6.47% in the last 24 hours. This positive trend emerges amidst a shift in investor sentiment regarding potential monetary policy adjustments by the US Federal Reserve.
• The catalyst for this surge appears to be a combination of several factors. Recent data from the US Labor Department shows strong labor market conditions, with unemployment claims remaining steady at 208,000 for the week ending April 27.
• This, combined with an increase in the Employment Cost Index, has instilled confidence in investors and led to increased belief that the Fed could adopt a more dovish stance by the end of 2024. Bitcoin rose by 6% following this development.

Bitcoin’s surprising price surge is driven by a combination of strong labor market conditions, potential monetary policy adjustments by the US Federal Reserve, and an increase in the Employment Cost Index.

Why did Bitcoin’s price rise?

This change in expectations is significant. Lower interest rates make fixed income investments less attractive and potentially shift capital towards riskier assets like cryptocurrencies. Data shows that market participants are increasingly betting on this scenario, with the likelihood of the Fed lowering interest rates to below 5.00% by December 18 rising significantly from 40% just a week ago to 61%.

Adjustment in M2 money supply

Fanning the flames is the US M2 money supply, which includes cash, savings, and short-term deposits, showing its first positive adjustment since November 2022. Historically, such increases have coincided with strong performances in the crypto market and potentially signaled a rally. A similar trend is apparent this time.

What’s the status of ETF entries?

Data obtained from Farside Investors highlights another bullish indicator: total net entries into US spot Bitcoin ETFs have astonishingly reached $11.2 billion since their launch in January. This strong investor interest underscores growing confidence in Bitcoin as a legitimate asset class. However, it’s worth noting that Grayscale GBTC experienced a net outflow on May 2, contradicting broader market enthusiasm and possibly attributable to specific investment strategies employed by leading firms.

Other cryptos also rose in price besides Bitcoin

The positive sentiment extended beyond Bitcoin, with other major cryptocurrencies recording notable gains. Ethereum (ETH) breached the $3,100 mark, while Solana (SOL), XRP, Cardano (ADA), and even meme coins like Dogecoin (DOGE) and Shiba Inu (SHIB) all registered significant increases.

Conclusion

Looking ahead, the recent resurgence in ETF entries appears to be a significant factor behind Bitcoin’s price increase. With ongoing positive economic data and the potential dovish turn by the Fed, the crypto market could be primed for a sustainable growth period. However, investors should remain cautious and conduct thorough research before making any investment decisions.