Bitcoin price breaks the level of USD 51,000: a new stage of the bull market in the cryptocurrency market?

Bitcoin price is rising again. It just broke the $51,000 mark. Ether now costs over $2,700.

Bitcoin price is rising again

The price of bitcoin is now approximately USD 51,500, which translates into a 20% jump in 7 days. Since yesterday, the cryptocurrency has increased in price by approximately 3%.

Ether is doing just as well. 1 ETH costs approximately USD 2,750 on exchanges. The Ethereum cryptocurrency increased by 15.5% during the week and by 2.8% during the day.

The mood remains very good. The Bitcoin Fear and Greed Index is 74, which indicates investor greed. It is worth adding, however, that the last study was carried out when “only” USD 49,742 was paid for one bitcoin.

In turn, the ether fear and greed index shows 74, which means greed.

It's growing, but why?

Why is the bitcoin price rising? The reason is the law of supply and demand and its consequences. As Kamil Gancarz, associated with the Cryptography Institute and Bitfold, pointed out in his post on X, “over USD 3.2 billion has flowed into bitcoin through #ETF products on US financial markets since their launch on January 11, 2024.”

But that's not all. Liquidity itself is increasing in financial markets, and “there is a possibility of liquidity problems in US treasury bonds.”

As evidence, refer to the second chart, which shows an index of prevailing liquidity conditions in the U.S. Treasury market, illustrated by the average yield error across the bond universe. This situation may also create liquidity problems for banks. As a result, we may see further monetary and fiscal expansion, leading to increased liquidity and rising asset prices. Bitcoin and other #cryptocurrencies will benefit significantly from this trend. In fact, they will be its main beneficiary

– added Gancarz.

This fits in with what many economists say. The economic situation in the US is not good and some data indicate that the markets will be short of breath. This is so important that in the fall of this year Americans are to elect a president for another term. Donald Trump, so far the favorite in this race, has already announced that he will not elect Jerome Powell, the current Fed president, for another term. The latter received a suggestion to support Joe Biden in the fight for power. He recently signaled that the U.S. central bank may start cutting interest rates this year. Based on the data cited above, it can be concluded that this will be necessary to stimulate the struggling economy.

Quantitative easing – the Fed's pumping of cash into markets – may lead to lower rates. Risky assets, including bitcoin and other cryptocurrencies, will benefit from all this. Let's add to this greater liquidity the effects of halving and the purchase of coins by ETFs. There may be a bull market ahead of us, the results of which will eclipse those of 2020-2021.

The above text does not constitute investment advice.