With BTC recently surpassing $70K, a downtrend has begun. Many are now wondering how low it will go and what the next adjustment price for BTC will be.
Bitcoin (BTC) has soared beyond $70,000 fueled by investor optimism regarding continued monetary expansion by the Federal Reserve. Despite this remarkable surge of over 5%, lingering macroeconomic obstacles loom, potentially shaping Bitcoin's future trajectory. What lies ahead for Bitcoin: a new price target or a crucial support level?
What's Driving the Surge in Bitcoin (BTC) Price?
Bitcoin (BTC) is currently trading around $70K, marking a notable uptick in price. This is the first instance of it closing above $69,000 since April 11, despite several fluctuations above $67,000 in the past five days. On May 21, Bitcoin saw an increase of over 4%, yet it still requires a 5% boost to reach its all-time high. In comparison, gold reached a peak of $2,450, and the S&P 500 index hit 5,325 points, showcasing a varied market performance.
Bitcoin's 51% year-to-date gain reflects investors' expectations of U.S. monetary expansion. With the Federal Reserve injecting liquidity to support the banking sector and the broader economy, investors are turning to scarce assets like Bitcoin. The potential for an economic recession further fuels this trend.
The U.S. monetary base (M2) expanded beyond $21.0 trillion in April 2024, up from $20.8 trillion in May 2023, ending a contraction period that began in April 2022. This increase signals rising inflationary pressures, despite current spending hesitations by businesses and individuals.
However, continued liquidity injections are not guaranteed if inflation remains a significant concern. The Federal Reserve might lower interest rates while also implementing measures like increasing bank reserve requirements to control economic growth and achieve a "soft landing," avoiding a recession after the period of high interest rates.
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