Here’s Why Bitcoin (BTC) Price Is Gaining Today

In the last 24 hours, Bitcoin (BTC) price has registered a phenomenal uptick, boasting a 6.47% surge. This upward trend occurred despite the cryptocurrency’s struggle to sustain above the $63,000 level. The surge aligns with new macroeconomic data, influencing investor expectations of a more accommodating monetary policy from the U.S. Federal Reserve (Fed). Steady jobless claims and the potential for interest rate reductions have buoyed market sentiment.

The U.S. Department of Labor reported that jobless claims held steady at 208,000 for the week ending April 27. This figure matches the lowest levels since mid-February, suggesting ongoing labor market strength. The Employment Cost Index also climbed 4.2% in the first quarter year-over-year, reinforcing investor confidence. This data has led to a growing belief among traders that the Fed may cut interest rates by the end of 2024, fostering a favorable environment for risk assets like cryptocurrencies.

Traders are now pricing in a 61% probability that the Fed will reduce rates below 5.00% by their December 18 meeting, a notable increase from 40% a week earlier. This shift in expectations is crucial as lower yields on fixed-income investments often drive capital towards higher-return assets such as stocks, commodities, and cryptocurrencies.

Rising M2 Money Supply Spurs Bitcoin Growth

The positive adjustment in the U.S. M2 money supply, which includes cash, savings, and short-term bank deposits, marks its first increase since November 2022. A growing money supply historically correlates with strong performances in the cryptocurrency market. Notable bull markets in 2014, 2017, and 2021 followed similar trends, indicating potential for the current market.

Bitcoin’s market capitalization stands at approximately $1.2 trillion. With around $6 trillion currently in money market funds, even a modest shift of 1% towards Bitcoin would translate into a $60 billion infusion into the cryptocurrency market. Such dynamics are critical as they suggest a broader acceptance and integration of Bitcoin into diverse investment portfolios.

Data from Farside Investors shows that the total net inflows into U.S. spot Bitcoin exchange-traded funds (ETFs) have reached $11.2 billion since their inception in January. This robust influx highlights growing investor interest and confidence in Bitcoin as a viable asset class.

Apple Buyback Sparks Search for New Investments

Despite the broader gains in Bitcoin and potential market inflows, Grayscale GBTC stood out with net outflows on May 2, contrasting with the overall positive trend. This occurred in a context where $564 million was withdrawn from similar funds the previous day, affecting entities managed by prominent firms such as BlackRock, Fidelity, and ARK 21 Shares.

The renewed investor interest in Bitcoin may also be influenced by skepticism over the sustainability of tech sector growth. Following Apple’s announcement of a $110 billion stock buyback program without corresponding plans for new product lines or market expansion, investors might be seeking alternative high-growth opportunities.

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