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The evolution of the price of Bitcoin amid geopolitical tensions, ETF inflows, and macro data: the factors to watch today

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Today the price of Bitcoin has returned above $67,000, opening the doors to a possible continuation of the upward trend, driven by a series of factors that have influenced the crypto asset.

Geopolitical tensions in the Middle East, inflow of Bitcoin spot ETFs and macro data in the USA have driven this week’s rally in the crypto market.

Let’s see below what all this entails and what we can expect for the future regarding the evolution of the price of digital gold.

Bitcoin price returns to 67,000 dollars today as geopolitical tensions rise

Today the price of Bitcoin seems to want to continue the bullish rally of last week with the crypto recovering to $67,000 triggering potential explosive scenarios in the short term.

The crypto has strengthened its position as a ” store of value ” with the intensification of geopolitical tensions in the Middle East, particularly the Israeli-Palestinian conflict.

Usually, in fact, Bitcoin, similarly to physical gold, serves well as a spendable P2P reserve in contexts where war jeopardizes the primary function of a State currency.

It is worth noting in this regard how the increase in economic uncertainties and the advancement of social turmoil in Iran after the tragic incident involving Iranian President Ebrahim Raisi and Foreign Minister Hossein Amirabdollah, both of whom died yesterday in a helicopter crash in the province of East Azerbaijan, may have positively contributed to the positive price action of Bitcoin today.

The perception of Bitcoin as a safe haven asset can lead to an increase in demand and a higher BTC price amidst such crises.

President of Iran Ebrahim Raisi died during a helicopter accident on the border with Azerbaijan – Mehr.

All other members of the Iranian delegation were also killed. Due to difficult weather conditions and poor visibility, the helicopter crashed into a mountain. pic.twitter.com/Cbwtz13imo

— Ukrainian Front (@front_ukrainian) May 20, 2024

In a context like this, Bitcoin could soon update its historical highs if it manages to break through a significant resistance at $67,500, as noted by Markus Thielen, head of research at 10x Research.

“A breakthrough above $67,500 could potentially lead to new all-time highs.”

Last week the cryptocurrency recorded a price increase of 7.3% and today it could continue with the same spirit, getting closer and closer to its historical record set at $73,700.

Eyes are also on the psychological threshold of $70,000 which could repel the bulls’ assault if not attacked with sufficient bullish momentum.

ETF inflows: a week marked by purchases for US funds

The positive price action of Bitcoin today is also and above all helped by the excellent data of the spot ETFs emerged last week, where we observed a prevalence of inflows over outflows.

After the months of March and April marked strong outflows for funds investing in this type of investment products, with the peak of outflows on May 1st which saw losses of 570 million dollars, now the situation seems to have calmed down.

From May 3 onwards, Bitcoin ETFs have indeed resumed accumulating BTC, causing the cryptocurrency to bounce back from its local low around $56,500.

In just 2 weeks, about $1.5 billion in investments have been added, pushing Bitcoin’s price action up to the current $67,000.

The funds IBIT, FBTC, and ARKB, respectively managed by BlackRock, Fidelity, and Ark Invest, lead the accumulation of cryptocurrencies while GBTC by Grayscale seems to have finished the liquidation phase, also starting to generate positive inflows.

In particular, the last trading day of spot ETFs saw inflows of $220 million, almost all of which was generated by the providers just mentioned.

With these numbers, the demand for ETF appears so strong that it removes more BTC from the market than are extracted by miners every day.

As Thomas Fahrer, CEO of the cryptographic review portal Apollo, observes:

This is 3 times the supply of new bitcoins from miners. ”

Currently, US spot ETFs alone hold about 2.8% of the total BTC supply

This trajectory could see an acceleration in the coming months, also considering the fact that the recent halving of the protocol has halved the rewards for miners from 6.25 to 3.125 BTC per block.

Macro Data: the relationship between US inflation and the price of Bitcoin

The last factor that may have influenced the evolution of the price of Bitcoin today and in the past week, concerns the macro data of the USA where a veiled optimism is looming on the horizon.

Although until recently inflation in the United States seemed out of control, the latest CPI data confirm investors’ expectations and increase the likelihood of a cut in interest rates on government bonds and a reversal of the monetary policy of the FED as early as September 2024.

According to the CME FedWatch Tool, markets have indeed assessed a 10% probability of a rate cut in June and almost 80% in September.

However, this perspective, while slightly benefiting risk-on assets, suggests that uncertainty is still high and that turbulence may not be over.

Anyway, in such complex and uncertain situations investors tend to seek refuge in Bitcoin as a hedge against inflation and economic instability, positively contributing to its price increase.

On this point, as noted on X by financial commentator Tedtalksmacro, the expansion of the US M2 money supply is the lowest since the 1990s and shows that there is ample room for liquidity conditions to be eased.

While unemployment benefit claims in the United States could provide another bout of volatility for risk assets, investors’ focus is increasingly on favorable liquidity conditions both in the United States and beyond.

These are his words:

While liquidity has definitely returned to crypto (BTC ETF), the speed of inflow has not yet seen a maniacal phase consistent with cycle peaks”.

The coming months could be explosively favorable for Bitcoin if US macro data supports financial markets with the injection of new liquidity.

Everything will depend on the trend of inflation of the US dollar and the labor market.

 Today the price of Bitcoin has returned above $67,000, opening the doors to a possible continuation of the upward trend. 

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