The U.S. stock market surged by 3% in a single session on June 5 off of the new jobs report and speculation on a newly-planned $1 trillion stimulus package. Hopes for an aggressive V-shape recovery may boost the prospect of a new Bitcoin bull market in the coming weeks.
According to Bloomberg, the Trump administration anticipates another trillion dollar stimulus next month. As Forbes previously reported, Senate Majority Leader Mitch McConnell said the second stimulus bill will be its last.
On March 27, U.S. President Donald Trump signed a historic $2.2 trillion stimulus bill. It included cash payouts to individuals and a loan program for small businesses.
Since then, the price of Bitcoin surged by around 55% from $6,750 to $10,440. BTC now hovers at $9,700 following a minor pullback from its recent rally.
Stimulus does not directly fuel appetite for high-risk assets such as single-stocks and cryptocurrencies. But, it creates optimism among investors and injects additional liquidity into the financial market.
From late March onwards, the Bitcoin spot market and stock trading applications such as Robinhood saw a significant boost in user activity.
Bitcoin and stocks saw a fear of missing out (FOMO)-driven rally from April to May. Unsurprisingly, Bitcoin’s spot market and stocks applications They both primarily cater to retail investors
Rising confidence of investors towards the short-term trend of the stock market is benefiting Bitcoin. But, the dominant cryptocurrency also has major macro factors that may fuel the next upsurge.
Three major factors that raise the probability of an immense Bitcoin bull cycle in the medium-term are: growing institutional adoption, compelling historical patterns, and the tendency of BTC to surge following a block reward halving.
In the past seven days, cryptocurrency investment firm Grayscale bought 9,503 BTC. It acquired more BTC than miners mined in the same period. After the halving on May 11, miners can mine about 900 BTC per day.
Grayscale’s accumulation of BTC directly reflects the rate of institutional adoption of Bitcoin. Through the Grayscale Bitcoin Trust (btc), which is a publicly tradable investment vehicle in the U.S., institutions can invest in Bitcoin.
Institutional demand for Bitcoin surpassed record highs when the assets under management (AUM) of the Grayscale Bitcoin Trust surpassed $3 billion in April.
Along with increasing institutional appetite for BTC, several historical patterns suggest Bitcoin is likely to see an extended uptrend in the coming months.
The Bitcoin blockchain network recorded a difficulty adjustment this week, following a drop in hashrate.
The term difficulty adjustment simply means that it has become easier for miners to mine Bitcoin blocks because there are less miners in the ecosystem.
Historically, every time a difficulty adjustment occurred, Bitcoin saw a long-term bull market. For instance, the difficulty of mining BTC was lowered in early April. In the subsequent two months, BTC rallied by 80%.
A confluence of relaxed financial conditions in the U.S., a strong stock market rally, rising appetite for risk-on assets, and positive macro factors indicate Bitcoin is set for an optimistic uptrend.
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