Bitcoin (BTC) experienced a 2.5% decline this
week, settling at $62,360, following a noteworthy 15% rebound in the previous
week. The cryptocurrency faced the risk of deeper losses as prices plummeted to
$56,537. However, Federal Reserve (Fed) Chairman Jerome Powell intervened,
providing support to crypto assets.
Powell's deliberate dismissal of rumors
regarding potential interest rate hikes this year, coupled with the Fed's
unexpected announcement of a reduction in its government bond-buying program
from $60 billion to $25 billion per month starting June 1st, sent a dovish
message to the market. This boosted both stocks and cryptocurrencies, with
Bitcoin reclaiming the $60,000 support and surging to $65,491 by May 6th.
However, despite the positive sentiment,
Bitcoin faced headwinds from capital outflows in spot BTC-ETFs. The ProShares
Bitcoin Strategy ETF (BITO) reported net capital outflows of $9.7 million,
extending to the fifth consecutive negative week. Additionally, prominent funds
like IBIT from BlackRock, FBTC from Fidelity, and GBTC from Grayscale collectively
lost $417.5 million last week, further dampening the potential for crypto asset
growth.
In other developments, the U.S. Securities and
Exchange Commission (SEC) targeted Robinhood, warning the company about its
crypto business. The SEC indicated that the crypto assets traded on the
platform could be considered securities, potentially leading to charges
following an investigation. This regulatory scrutiny added to the industry's
overall disappointment, especially considering Robinhood's efforts to register
its crypto business.
Amidst these challenges, BlackRock aims to
restore optimism by identifying new investor categories, such as sovereign
wealth funds, pension funds, and endowments, which may soon enter the market to
trade spot ETFs. If this materializes, BTC prices could surge to
$110,000-120,000 by October. On the other hand, Standard Chartered warns that
BTC may slip to $50,000 per coin and lower. In order to follow this downside
scenario BTC has to fall below $60,000 support first.