- Bitcoin rose to within inches of $75,000 on Tuesday.
- Traders are betting on Trump to not escalate the conflict in the Middle East, analysts say.
- Three macroeconomic datasets published this week will offer clues on where the Fed leans on interest rates.
Bitcoin jumped to a four-week high of $74,929 after President Donald Trump said that Iran had reached out for potential peace talks even as the US moved ahead with its naval blockade of the Strait of Hormuz.
Crypto traders believe that while White House rhetoric has become more aggressive, the actual policy stance has softened, according to a note to investors from digital asset trading firm QCP on April 13.
The US may talk big, but it is highly unlikely that the Americans would intercept Chinese vessels and risk a global escalation, the analysts wrote.
“Despite renewed blockade threats, implied vols and risk reversals have drifted back toward pre-conflict levels, a signal that panic has faded even if uncertainty has not,” QCP wrote. “BTC and ETH continue to absorb geopolitical noise and weekend liquidation events, suggesting a steady underlying bid rather than fragile positioning.”
Bitcoin and Ethereum are up 5% and 9% respectively over the past 24 hours. Bitcoin trades at $74,586 and Ether at $2,378.
The rally marks a bullish signal for the overall cryptocurrency market, which has lost 39% of its total value since October to be worth $2.6 trillion on Tuesday.
Exchange-traded funds reflect that slight optimism in the market. Last week, Bitcoin ETFs saw $833 million in inflows whereas their Ethereum counterparts saw investors inject $187 million, according to data from DefiLlama.
To be sure, traders kicked off this week with some caution. Bitcoin ETFs have so far seen $291 million in outflows. Investors have poured just over $9 million into Ethereum ETFs.
Stock markets offer a similarly optimistic view. The S&P 500 index is up 1% over the past 24 hours and over 4% over the past five days. The Nasdaq is up 1% over the past 24 hours and just under 6% over the past week.
Still, a key driver of Bitcoin’s price remains the state of the US economy. Low inflation will embolden the Federal Reserve to cut interest rates. Low interest rates usually incentivise investors to bet on risk-on assets like Bitcoin.
Officials of the US central bank will next meet on April 28 and 29 to set interest rates.
This week, investors will carefully consider three sets of inflation data for clues to how the US economy is doing. Those are the publication of the March’s Producer Price Index on Tuesday, Wednesday’s industrial production data, and Thursday’s job market data.
Eric Johansson is DL News’ managing editor. Got a tip? Email him at eric@dlnews.com.
