Bitcoin has maintained its position above $77,000, following a notable surge to its highest level since early February. The cryptocurrency is poised for its best monthly performance in a year, with a 13.6% increase in April, according to data from CoinGlass.
This rebound comes after a challenging period, marked by the longest losing streak in crypto markets since 2018, with consecutive monthly declines from October to February. The improvement in the macroeconomic backdrop, including a strong recovery in US equities, has contributed to the turnaround. The S&P 500 and Nasdaq have regained record highs after briefly entering correction territory.
A significant factor driving the move is the growth in the supply of Tether's USDT, the largest stablecoin, which has increased by approximately $5 billion over the past two weeks to nearly $150 billion. This expansion is crucial, as stablecoins provide liquidity in crypto markets, facilitating the purchase of digital assets. Analysts view stablecoin growth as an indicator of capital inflow into the crypto market, which is a positive signal for asset prices. Geopolitical tensions in the Middle East and uncertainty surrounding the Iran conflict persist, keeping oil prices elevated.
However, markets appear to be looking beyond these concerns, with strong corporate earnings and resilient equity markets offsetting worries about higher energy costs and geopolitical risks, according to Jasper de Maere, an OTC trader at Wintermute. De Maere noted that the equities and crypto markets seem to have become desensitized to intricate headlines on the conflict's direction, indicating a level of fatigue and potential complacency.
Bitcoin is currently hovering near the top of its trading range, with the $79,000 level proving to be a significant cap as traders take profits. The ability of bitcoin to break through this level will depend on the driving forces behind the move and the participants involved. A breakout supported by sustained institutional demand can mark a more durable shift, whereas moves driven mainly by short covering tend to fade once momentum cools, said Adam Haeems, head of asset management at Tesseract Group. The upcoming April Fed meeting will be a crucial test for the current rally, with the continued inflow of ETFs potentially leading to a higher trading range if the rally holds.