Bitcoin’s next rally hinges on three things.
Max Kahn, CEO of investment adviser Digital Wealth Partners, argues that the biggest cryptocurrency in the world’s next leg up will be determined by energy-driven inflation data, central bank policy expectations and the consistency of institutional inflows.
As the top crypto hovers around $74,000 — up 8% over the past two weeks — traders have poured in $523 million into exchange-traded funds in April, underscoring what Kahn describes as a structural bid that did not exist in prior cycles.
“Bitcoin’s move toward $75,000 appears to be driven by a combination of macro and structural factors rather than any single catalyst,” Kahn wrote in an investor note shared with DL News.
Khan’s call comes as Bitcoin investors are increasingly betting that the conflict in the Middle East will deescalate. While Washington has ramped up the rhetoric against Tehran, market watchers argue that the reality shows that tensions are easing back to pre-conflict levels.
That’s “a signal that panic has faded even if uncertainty has now,” digital asset trading firm QCP wrote in a note to investors on Monday.
Investors of more traditional assets have also regained some of their pre-conflict bullishness.
“So as far as the stock market is concerned, the war is over until further notice,” argues Ed Yardeni, president of Yardeni Research. “It has been yet another V-shaped buy-the-dip recovery in the S&P 500.”
Here are Kahn’s key watchpoints for Bitcoin as traders eye the next move up.
To be sure, investors still have reasons to be worried.
On Tuesday, the International Energy Agency on Tuesday sharply lowered its forecasts for global oil supply and demand growth. It warned that both will fall from last year’s levels as the US-Israel war with Iran disrupts flows and drags down the global economy.
Higher inflation stemming from the conflict means central banks around the world will consider increasing interest rates. Higher rates mean less money supply to support risky assets like Bitcoin.
But when inflation appears contained, markets lean toward a more accommodative Federal Reserve. That environment historically fuels risk assets. Bitcoin, now widely traded through regulated vehicles, benefits directly from that shift in liquidity conditions.
“When markets begin to price in a more stable or accommodative rate environment, we tend to see increased demand for risk assets, including Bitcoin,” Kahn notes.
At the same time, positive structural demand continues to support the Bitcoin market.
