Bitcoin price shows strength as investors anticipate return of money
Bitcoin price shows strength as investors anticipate return of money

Bitcoin rallies as central bank stimulus packages become more common, and the Fed’s signal of “higher for longer” interest rates aligns with investors’ market view.
Bitcoin $61,817 rose by 2% in the last 24-hours, recovering after two days of difficulty in surpassing the $61,500 resistance. By sustaining price levels above $62,500, the current upside movement demonstrates that Bitcoin can still experience positive price fluctuations regardless of the U.S. spot Bitcoin exchange-traded fund (ETF) flows, which saw $100 million in net outflows over four days.
Several factors have improved sentiment toward cryptocurrencies, beginning with China's announcement of issuing $138 million in long-term bonds to boost the economy. Although this was expected since the announcement in March, it reaffirmed that governments are acknowledging increased risks of recession. This was in response to data indicating that China's aggregate credit decreased in April for the first time in seven years.

Zou Wang, an investment director at Shanghai Anfang Private Fund Management, told Reuters that the market now anticipates further liquidity injections from China's central bank, possibly including cuts to interest rates. Such actions would exacerbate issues stemming from recent expansive measures by the U.S. Federal Reserve (Fed), which led to an increase in the U.S. monetary supply in March for the first time in two years.
At first glance, injecting more money into the economy seems beneficial, but it can lead to higher inflation over time, especially as companies and individuals might delay spending and investment. As fixed-income investors begin to recognize that their returns are barely keeping pace with rising inflation, scarce assets like Bitcoin could become more attractive.