Originally published on: October 04, 2024
Bitcoin has surged by 2.4% after retesting support at $59,900, despite facing resistance at $62,000. The growth on Oct. 4 was influenced by various macroeconomic factors, such as strong US employment data, anticipated economic stimulus in Japan, and increasing worries about the US financial system.
The US economy is experiencing growth, but its fiscal situation is deteriorating. Interestingly, the US dollar has reached a 50-day high against major currencies, including the euro, pound, and yen.
While historically, the US dollar and Bitcoin have had an inverse relationship, the recent market movements are challenging that norm. One explanation could be the “Milkshake Theory,” suggesting the US is absorbing global liquidity through higher interest rates and robust economic fundamentals.
Further improvement in US economic indicators is reinforcing this trend. For instance, better-than-expected payroll data showing 254,000 new jobs in September surpassed expectations.
Simultaneously, concerns about global economic growth are rising following Japan’s plan for economic stimulus. The ongoing conflict in the Middle East has led to a 9% weekly surge in oil prices, heightening inflation risks on a global scale.
As these economic factors unfold, Bitcoin might benefit from the expectation of increased fiat money supply. However, its growth could be restricted by a “flight-to-quality” movement, where investors seek safety in cash and sturdy companies.
Renowned investor Stanley Druckenmiller has raised concerns over the US Federal Reserve’s position regarding interest rate cuts given the strong US economy. His comments reflect broader concerns about the current US fiscal landscape and its impact on alternative assets like Bitcoin.
In conclusion, Bitcoin’s recent performance is closely tied to macroeconomic conditions and increasing apprehensions about the US financial system. Stay updated as these factors continue to influence the cryptocurrency market.
