Bitcoin Soars Past $65K: Can BTC Maintain This Momentum?

Bitcoin price reclaims a key resistance level, with the question of whether sufficient bullish catalysts exist to support the rally.

Source: www.coinkolik.com

Bitcoin's price fell to $62,705 in the early hours of September 26, leaving bulls momentarily disheartened after three rejections at the $64,000 resistance level in just four days. However, the situation changed with the opening of the U.S. stock market, which saw the S&P 500 index hit a new all-time high. Following this, Bitcoin surged over 3%, reclaiming the $65,000 mark. Market analysts suggest that Bitcoin's path to $70,000 has been bolstered by macroeconomic trends, such as lower interest rates in the U.S. and renewed interest from long-term institutional investors. Concerns about a stock market bubble are subsiding amid signs of strong economic growth, alongside U.S. housing prices reaching record levels.

Tech Stock Rally and Shifts in Monetary Policy Influence Investor Sentiment

The technology sector has been the primary driver of global stock market gains, with several companies posting over 30% increases in the past six months. On September 24, investment researcher Lyn Alden noted that Bitcoin is the asset most correlated with changes in the global monetary base (M2). 

Historical data reveals that Bitcoin’s price rose in 83% of cases over a 12 month period when liquidity was added to bank deposits and circulating money. In comparison, gold followed M2 trends in only 68% of the past decade. This data is favorable for Bitcoin, especially as governments resume stimulus measures after an 18-month pause, and it also benefits the stock market. The S&P 500 index shows an 81% correlation with changes in the monetary base, according to the same study. As a result, instead of being an uncorrelated asset, this cycle may reinforce Bitcoin's role as a hedge against ongoing government money-printing policies.

On September 26, the positive momentum in the U.S. stock market was largely fueled by a significant player in the AI supply chain, which raised its quarterly revenue guidance to $8.9 billion, up from $8.5 billion. This company anticipates a fivefold increase in demand for chips used in AI data centers by 2025, providing reassurance for investors, particularly those heavily invested in the tech sector.

Bitcoin Appears to Be A Less Risky Investment

Further enhancing investors’ risk appetite was the third estimate of the U.S. GDP growth for the second quarter, which came in at 3%, as reported by the exchange. This supports expectations of a 2.9% annualized growth rate for the third quarter. Additionally, China's newly announced economic stimulus measures led to the largest weekly surge in the CSI 300 stock index in over a decade. 

However, the most significant recent factor impacting Bitcoin’s momentum was the $242 million inflow into spot Bitcoin exchange-traded funds (ETFs) over just two days. Investors had previously been skeptical about institutional demand gaining traction, especially after BlackRock’s iShares Bitcoin Trust ETF experienced only $5 million in inflows since its launch on August 27, according to Farside Investors data.

Bitcoin's rise above the $65,000 mark is fueled by favorable macroeconomic conditions, increasing institutional demand, and renewed strength in the tech sector. The substantial inflows into Bitcoin ETFs indicate a shift in investor sentiment and a perceived reduction in risk, potentially paving the way for a rally toward $70,000.

Disclaimer: FameEX makes no representations on the accuracy or suitability of any official statements made by the exchange regarding the data in this area or any related financial advice.