Bitcoin has risen above $65,000, but can BTC price maintain this level?

Bitcoin price fell to $62,705 in the early hours of September 26, temporarily losing hope for the bulls after suffering a third rejection of the $64,000 resistance level in just four days. However, as the US stock market opened, the tide turned and the S&P 500 index hit a new all-time high. Bitcoin (BTC) soon rose more than 3% to regain the $65,000 level.

Some market analysts believe that macroeconomic trends, including lower U.S. interest rates and renewed interest from long-term institutional investors, have strengthened Bitcoin’s chances of reaching $70,000. Essentially, with U.S. home prices hitting record highs and signs of robust economic growth, fears of a stock market bubble are fading.

Rebound in technology stocks and monetary policy changes impact investor sentiment

The technology sector has been a key driver of the rise in global stock markets, with several companies achieving gains of more than 30% in the past six months. Notable companies include Alibaba, Tesla, Nvidia, Taiwan Semiconductor, and Apple. Michael Matousek, senior trader at US Global Investors Inc., told Bloomberg:

“AI is still a thing, but I think people are too excited and overhyped about what we can expect in the short term.”

On September 24, Lyn Alden, investment researcher and founder of Lyn Alden Investment Strategy, highlighted that Bitcoin is the asset most correlated with changes in the global monetary base (M2). Historical data shows that the price of Bitcoin rose 83% in a 12-month period as liquidity was added to bank deposits and currency in circulation. In contrast, gold has followed the direction of M2 only 68% of the time over the past decade.

This data is good for Bitcoin (especially as governments begin to roll out stimulus measures in 18 months), but it also helps the stock market. According to the same study, the S&P 500 index shows an 81% correlation with currency base changes. As a result, this cycle could further consolidate Bitcoin as a hedge against governments’ relentless money-printing policies, rather than proving to be an uncorrelated asset.

The strong performance in the U.S. stock market on September 26 was led by memory chip supplier Micron, a key player in the artificial intelligence supply chain. Micron raised its quarterly revenue guidance to $8.9 billion from its previous estimate of $8.5 billion. The company predicts that demand for chips used in AI data centers will increase fivefold by 2025, providing some reassurance to investors, especially those relying heavily on the technology sector.

Bitcoin appears less risky

Further boosting investors’ risk appetite was the third estimate of U.S. gross domestic product (GDP) growth in the second quarter, which was 3%, according to Yahoo Finance. This supports expectations that the average annual growth rate in the third quarter will reach 2.9%. Additionally, China’s newly announced economic stimulus package caused the CSI 300 stock index to post its biggest weekly surge in 10 years.

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However, the most significant recent development affecting Bitcoin’s momentum is the influx of $242 million into spot Bitcoin exchange-traded funds (ETFs) in just two days. Investors were skeptical that institutional demand would gain traction, especially after BlackRock’s iShares Bitcoin Trust ETF attracted only $5 million in inflows since its launch on August 27, based on Farside Investors data.

Bitcoin’s rally past $65,000 is being driven by favorable macroeconomic trends, increased institutional demand, and renewed strength in the technology sector. Significant inflows into Bitcoin ETFs suggest a shift in investor sentiment and a decrease in perceived risk, potentially setting the stage for Bitcoin to rise towards $70,000.