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Bitcoin has the best week since the beginning of March. The price exceeds 66 thousand. USD

Bitcoin has the best week since the beginning of March. The price exceeds 66 thousand. USD

created Daniel Kostecki17 May 2024

The first more significant turn in the quotations Bitcoin We could see this already at the beginning of May, when the price rose from around 56. USD. Today, two weeks later, bitcoin rate is located 10 thousand USD higher, i.e. 17% higher. Both in the first week of May and this week, things happened that have a lot in common and that the BTC price currently seems to be following.

Data from the USA and their impact on the bitcoin price

While we were celebrating May Day, key data from the labor market were published in the USA. Then it turned out that they were worse than expected, which led to a decline in bond yields and a weakening of the USD. At that time, Bitcoin began to recover from the lows after the correction. A drop in profitability and a weaker USD is usually good news for the valuation of risky assets such as bitcoin. Key data from the American economy were also published this week.

We're talking about data about CPI inflation and retail sales and industrial production. These data were disappointing, pointing to continued stagnation of the U.S. industrial sector and continued stagnation of the American consumer. This again allowed investors to overestimate US bond yields lower, which fell to their lowest level since April 5. The entire southward journey of yields is a move from 4,68% on May 1 to 4,31% on May 16. Bitcoin seemed to follow U.S. yields day in and day out on this date.

A chance for bitcoin ATH due to another drop in yields in the United States?

Assuming that the risk appetite related to changes in US bond yields, and more precisely, the decline in market discount rates, will affect the BTC price as in the first half of May, it is possible that new ATH may appear on bitcoin by August/September. However, a necessary condition is a decline in profitability towards 4%, and preferably towards 3,8%, where the profitability was at the beginning of the year. If such a move occurred, the price of bitcoin could increase even to 80. USD.

It seems that currently many factors may support the potential for a decline in yields, because inflation in the US should slow down even more in May, and data from the real economy are starting to leave much to be desired, surprising more and more negatively.

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About the Author
Daniel Kostecki
Chief Analyst of CMC Markets Polska. Privately on the capital market since 2007, and on the Forex market since 2010.