Investment giant BlackRock anticipates Bitcoin's value reaching $700,000 - could we witness a test of this prediction in the near future?
Cryptocurrency enthusiasts are talking once more about whether Bitcoin's price has turned a corner, as the digital asset nears the $100k mark. With a bullish momentum rekindled, Bitcoin nearly touched $98,000 on May 2, following weeks of sideways movement.
Bitcoinoses at Ticks of $97K as Bullish Momentum Surges
After some tumultuous weeks, Bitcoin, the world's leading cryptocurrency, nearly reached $98,000 on May 2, hitting a high of $97,905. As of writing, BTC is trading around $97,650, just shy of its peak but still holding on to most of its gains.
From a historical point of view, Bitcoin has recovered more than 24% from its February low of $78,200 and over 30% from the early April dip near $75,000.
Has Bitcoin tasted a potential reversal of the decline set off by February's economic upheaval? Many believe so; one key factor supporting the rebound is aggressive buying by treasury-focused firms.
For instance, in the USA, Strategy bought another $1.4 billion worth of Bitcoin on April 28, bumping up its holdings to 553,555 BTC. The firm's Bitcoin treasure trove is now valued at approximately $37.9 billion, translating to a year-to-date unrealized gain of about $5.8 billion.
In Asia, Japanese firm Metaplanet is quietly building its own treasury strategy, loosely modeled on companies like Strategy. On May 2, the company issued another ¥3.6 billion in bonds, equating to roughly USD $23 million. This was its 12th bond issuance, with the capital being channeled to expand its Bitcoin holdings. Metaplanet has already amassed more than 5,000 BTC and seeks to reach 10,000 BTC by the end of 2025.
The Cooling Economy Causes Heating Bitcoin Prices
The recent economic data presents a landscape of deceleration rather than expansion. For example, the April ADP jobs report showed that only 62,000 private sector jobs were added, missing expectations of 108,000 and falling well below March's 147,000 print, marking the weakest monthly growth since July 2024.
This lackluster job market growth, paired with an unexpected contraction in GDP, has economists wondering if a cooling trend is in the making. The first official estimate for Q1 2025 showed GDP shrinking by 0.3%, missing the expected modest 0.2% increase.
The majority of this decline is linked to a sharp increase in imports during the initial part of the year, as businesses raced to stockpile inventories ahead of the anticipated trade tariffs. The ensuing mismatch between rising imports and stagnant exports negatively impacted GDP, as predicted by basic economics.
Meanwhile, inflation appears to be more persistent than predicted. The Core PCE price index, embedded within the GDP data, rose by 3.5% year-on-year, higher than the 3.1% that was expected, creating complications for interest rate adjustments and potentially extending the Federal Reserve's cautious stance.
Divergent responses to macroeconomic signals are emerging in both the commodity and crypto markets. Gold, which soared above $3,500 per ounce by April 21 in response to new tariffs and broad geopolitical tension, has since retreated by nearly 10%, now trading around $3,200. Bitcoin, meanwhile, is steadily gaining momentum, climbing to a two-month high as it inches closer to $100,000.
This shift in capital from gold to Bitcoin may not be by chance, as investors seek alternative stores of value when traditional safe havens start losing traction, and Bitcoin's limited supply and growing institutional demand appear to be supporting this role.
The Bull Case Builds for Bitcoin
Crypto and financial analysts are now aligning behind the belief that Bitcoin is showing strength, but whether this strength holds depends on how Bitcoin behaves around specific price zones and how market participants react to growing profit margins.
For example, Robert Breedlove, a long-term Bitcoin thinker and founder of the What is Money podcast, pointed to the cost of production as a reliable indicator for identifying cycle lows. Using research from Blockware, he explained that the industry-wide average cost to mine Bitcoin has historically aligned with key bottoms, such as March 2020 and December 2018.
Now that Bitcoin has risen above the cost of production, miners are more likely to hold rather than sell, potentially decreasing short-term supply pressure and spawning a more bullish environment.
PlanB, known for creating the stock-to-flow model, highlighted another signal. He noted that Bitcoin's current price has moved above its 2-year and 5-month realized prices. Realized price represents the average value of all coins based on when they were last moved. When the market trades above those levels, it usually indicates a strong position.
In his words, all realized prices are now below Bitcoin's current level, indicating that the uptrend remains intact. Historically, this configuration has formed only during active bull phases and when short-term holders start to re-enter the market.
Technical analyst Rekt Capital offered a more detailed roadmap. He argues that if Bitcoin follows the same path it did in late 2024, it might first resist around $99,000, hold support at $93,500, break through the $97,000 to $99,000 range, and then move towards the $104,500 zone. This structure could bolster a run towards new highs, given that key support levels are maintained. A failure to hold these levels would signal a shift towards a continuation of range-bound behavior, rather than a bullish breakout.
Tomas, a markets analyst who studies long-term trends across risk assets, drew attention to recent price behavior in broader financial markets. He focused on the S&P 500's monthly chart, which showed a 14% lower wick in April. While such candles often signal bullish pressure, historical data reveals a mixed picture. Out of 11 similar wick formations since 1950, only 5 marked the actual low, while the remaining formations were followed by further declines, sometimes of up to 20%.
The implication is that sharp rebounds might not assure that the correction is over; instead, they may indicate a short-term reset in sentiment.
In summary, the fundamental strengths of Bitcoin are becoming increasingly apparent. However, attention must be paid to price structure, as key support and resistance levels remain in play.
- The bullish momentum for Bitcoin is surging, as it nearly reached $98,000 on May 2, with analysts speculating whether this marks a potential reversal of the decline.
- Treasury-focused firms like Strategy and Metaplanet are aggressively buying Bitcoin, amassing thousands of tokens and channeling capital for further acquisitions.
- As adoption and investment in Bitcoin continue, alternative cryptocurrencies such as XRP, token, and other cryptos on DEX platforms are also benefiting from this rebound in the crypto market.
- In contrast, the traditional financial market, particularly the S&P 500, has shown mixed signals, with a 14% lower wick in April indicating potential bullish pressure but a historical tendency for further declines.
- Economists are concerned about the cooling economy, as the latest data presents a landscape of deceleration, with low job market growth and an unexpected contraction in GDP.
- Despite the uncertain macroeconomic situation, sports and luxury goods companies are increasingly exploring the use of Bitcoin and other cryptocurrencies for sponsorship deals, recognizing the growing potential of the digital asset in finance and technology.
- With institutional demand growing and market participants eyeing key support levels, the future remains uncertain for Bitcoin, but many experts believe that the underlying strengths could lead to further gains if the current momentum continues.
