- Bitcoin reached $63,000 on Monday.
- Federal Reserve policy, the war in the Middle East, and the US presidential election will likely keep affecting crypto this year.
Bitcoin rose almost 3% on Monday, to $63,000, but there’s reason to believe the top cryptocurrency could keep wobbling for a while.
Persistent concerns about US monetary policy, geopolitical risks, and the outcome of the US presidential election will likely keep affecting the price of the top cryptocurrency all the way through 2024.
Fighting inflation
Inflation is still too high, Dallas Federal Reserve president Lorie Logan said on Friday, and it’s not yet certain if monetary policy is tight enough.
Investors will weigh April’s producer-price index, which lands on Tuesday, and consumer-price index data that will come on Wednesday. Federal Reserve chair Jerome Powell, meanwhile, will give more clues in prepared remarks on Tuesday.
Powell recently said that the Fed wasn’t looking to hike interest rates again — at 5.25%–5.50%, they remain at levels unseen since before the Global Financial Crisis.
But periods of inflation tend to last years, according to David Schassler, investment firm VanEck’s head of multi-asset strategies.
“Expect the market ride to get bumpier as investors adapt to the current environment,” Schassler said.
If it raises interest rates, the US central bank will make it more expensive for people and businesses to borrow money. Risky investments like Bitcoin tend to perform poorly in such conditions, while the US dollar tends to get stronger.
Geopolitical risk
The wars in Ukraine and Gaza also threaten both crypto and broader markets.
Should the Israel-Hamas war evolve into a broad regional conflict, it would have a serious impact on Western economies, analysts at Dutch banking and finance firm Rabobank wrote last year.
That’s because any escalation could push food and energy prices higher — fueling inflation even further and making it harder for central banks to ease monetary policy.
Any heightened tensions on those fronts could force Bitcoin back below $58,000 as crypto becomes increasingly tied to mainstream financial assets, DL News was previously told.
US election
Former president Donald Trump and incumbent Joe Biden will square off in the presidential election in November. And crypto regulation will likely be affected by the outcome.
The Biden administration has often been at odds with the crypto industry. Just last week, the president drew ire when he vowed to veto legislation from the House of Representatives that would have repealed a controversial crypto accounting policy.
Trump, meanwhile, has taken an increasingly positive stance toward crypto. “If you’re in favour of crypto you’d better vote for Trump,” he said last week.
Crypto market movers
- Bitcoin rose 2.5% in the last 24 hours, to $63,000.
- Ethereum is up 0.9% in the same period, trading for $2,960.
What we are reading
- Tornado Cash dev Alexey Pertsev’s verdict will change the course of crypto privacy — here’s a timeline — DL News
- Crypto Funds See $130M Inflows, Ending 5-Week Outflow Streak — Milk Road
- How the Top One-Third of FTX Creditors Are Boosting the Payouts for Everyone Else — Unchained
- Why the US election will decide the fate of Ethereum ETFs — DL News
- Chinese Police Bust $296 Million Illegal Crypto-Based Underground Bank — Milk Road
Sebastian Sinclair is a markets correspondent for DL News. Have a tip? Contact Seb at sebastian@dlnews.com.
