Bitcoin (BTC) steadied near $80,000 during Thursday’s Wall Street open, as a surge in US equities to fresh all-time highs signaled renewed risk appetite among investors. The recovery comes after a brief dip triggered by higher-than-expected US inflation data, which had initially weighed on crypto markets.
US stocks defy inflation pressure
Data from TradingView showed BTC/USD recouping much of Wednesday’s losses, which followed the release of the highest US inflation figures in four years. Despite the implications for potential monetary tightening, the S&P 500 posted its highest daily close on record and continued climbing Thursday. The Dow Jones Industrial Average also revisited the 50,000-point mark for the first time since early February.
Also read: Bitcoin price stalls below $80K as capital inflows and futures caution create resistance
Analysts at The Kobeissi Letter described risk appetite as “skyrocketing,” noting that assets under management in US leveraged ETFs reached a record $177 billion. Since the March market bottom, leveraged ETF AUM has surged by $45 billion, a clear signal that institutional and retail investors are piling into risk-on positions.
Global money supply and oil in focus
Kobeissi also highlighted a sharp acceleration in global money supply, which is typically a tailwind for risk assets including cryptocurrencies. US M2 money supply jumped by $1 trillion year-over-year, or 4.6%, to a record $22.7 trillion. This growth runs counter to concerns that central banks are adopting a hawkish stance, suggesting liquidity conditions remain supportive for markets.
Also read: Bank of England rethinks strict stablecoin rules as US banks prepare for tokenization boom
Meanwhile, oil prices continued to test the $100 per barrel level for WTI crude, as geopolitical tensions persist amid the ongoing US-Iran conflict. The inability of oil to break decisively above that threshold may be providing some relief to inflation-sensitive markets.
Bitcoin’s decisive support level
From a technical perspective, Bitcoin is trading at a critical juncture. Trader Daan Crypto Trades noted that BTC is “hanging on to that ~$79.4K level which marked the previous highs in April.” This zone coincides with key moving averages, including the 200-period simple and exponential moving averages, which are trending upward toward the current spot price.
Fellow trader CrypNuevo emphasized the importance of this support, stating that if Bitcoin holds the range highs, it could push toward the 50-week exponential moving average at $84,000 to $85,000. However, a failure to hold could trigger a rotation back to the mid-range, potentially exposing lower support levels if momentum shifts.
Why this matters for investors
The current correlation between Bitcoin and US equities underscores the broader macroeconomic forces driving risk assets. With the S&P 500 at record levels and money supply expanding, the environment remains favorable for Bitcoin in the medium term. However, the persistence of inflation and the potential for tighter monetary policy present risks that could test the resilience of this rally.
For traders, the $79,400 to $80,000 zone represents a key line in the sand. A confirmed hold could open the door to a move toward $85,000, while a breakdown would likely shift focus to lower support levels.
Conclusion
Bitcoin’s ability to hold above $79,400 amid record equity highs and expanding money supply suggests that the macro backdrop remains supportive for a push toward $85,000. However, inflation data and geopolitical risks warrant caution. Investors should monitor the S&P 500’s trajectory and central bank signals for further clues on Bitcoin’s near-term direction.
FAQs
Q1: Why is the $79,400 level important for Bitcoin?
This level marks previous highs from April and aligns with key moving averages. Holding it could lead to a breakout toward $85,000, while a failure may trigger a pullback to lower support.
Q2: How does the S&P 500 all-time high affect Bitcoin?
A rising S&P 500 typically signals strong risk appetite, which often benefits Bitcoin as a high-beta asset. The current correlation suggests that equity strength supports crypto prices.
Q3: What is the risk if inflation remains high?
Persistent inflation could force central banks to tighten monetary policy, reducing liquidity and potentially dampening demand for risk assets like Bitcoin. However, expanding money supply may offset some of that pressure.
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