Crypto Bounces Back, Spurring Hopes Coin Has Found Stable Price Floor

Crypto’s making a comeback. Bitcoin reached $73,000, recouping about $10,000 in value from recent lows. No. 2 crypto Ethereum and the broader market perked up in turn.

About $225 million flowed into US spot bitcoin ETFs on Tuesday, adding to more than $450 million the day before. No funds saw outflows, according to SoSoValue data. Outflows from spot bitcoin ETFs piled up to $9 billion from mid-October to late February, Bloomberg Intelligence found, but inflows are starting to turn the tide. Investors have poured ~$1.7 billion into the ETFs since late February. 

Perpetual open interest, meanwhile, notched its largest daily increase since July, Glassnode found, signifying an expansion in leveraged bets, which had been liquidated en masse in October. 

‘Buy the Dip’ Behavior

Bitcoin’s bounce could be partly due to timing. Bitcoin’s four-year cycle may be moving to its next stage after hitting bottom, VanEck CEO Jan van Eck told CNBC. The four-year cycle can also act as a self-fulfilling prophecy to some degree, as investors who think digital assets have hit rock bottom look to profit from its return to glory.

Geopolitical events may be helping to drive the rebound. Investors seeking out decentralized financial options amid global turmoil have come to see the assets as an alternative safe haven. Even if that’s not the case, crypto’s resilience through the start of war between the US, Israel and Iran in the past week could further boost investors’ confidence. 

Washington, meanwhile, is amplifying that confidence with recent pro-crypto moves:

• Kraken said yesterday that it had become the first crypto exchange to be granted access to the Fed’s payment networks, including its settlement system Fedwire. That puts Kraken on par with major banks. The Bank Policy Institute, which represents many of the US’s biggest banks, wrote that it was “deeply concerned” about how the update played out. 
• President Trump seemed to take crypto companies’ side over big banks’ in a social media post Tuesday, writing that banks were “threatening and undermining” the Genius Act and holding the Clarity Act hostage. Shares of Coinbase, whose CEO pushed back on the Clarity Act’s restrictions around stablecoin rewards, jumped about 15% Wednesday. 

Fragile Footing: While a confluence of factors is fueling renewed crypto confidence (and higher prices), the new floor could always fall out from under the sector, which, despite talk of its possible safe-haven status, is still a volatile investment. The sector is sensitive to geopolitical news, which has reached torrential levels lately. Still, the White House’s backing is a strong force in crypto’s favor, especially if crypto companies get the Clarity Act they want.