Bitcoin, the largest digital token, experienced a surge to its highest level in over two weeks as investor sentiment received a boost from a deal reached on raising the US debt limit. On Monday, Bitcoin registered a gain of up to 3.2%, reaching $28,006 before retracting slightly to trade at that level as of 8 a.m. in London. Other cryptocurrencies such as Ether and Binance Coin also saw gains but retreated from their intraday highs.
The agreement between President Joe Biden and House Speaker Kevin McCarthy to address the debt-ceiling issue has instilled confidence in global markets. However, the deal still awaits clearance from Congress to avert a potential US default. Investors are mindful of the recent increase in Treasury yields and expectations of further tightening of US monetary policy, which could present additional challenges.
Bitcoin has embarked on a five-day streak of gains, marking its most substantial winning stretch since March. This positive momentum provides some relief after a challenging quarter characterized by liquidity issues and increased regulatory scrutiny in the United States. In the past, Bitcoin has exhibited five-day winning streaks on numerous occasions, following which it has recorded an average increase of nearly 19% over the subsequent 20 days. This historical data highlights the potential for continued upward movement.
Meanwhile, JPMorgan strategists, led by Nikolaos Panigirtzoglou, have put forth an analysis suggesting that under the assumption of bitcoin equaling gold in private investors’ portfolios, the cryptocurrency could reach a price of $45,000. They view this figure as an upper limit, indicating limited room for growth beyond the increase driven by the doubling of mining costs. JPMorgan anticipates Bitcoin’s production cost to double during the upcoming halving, scheduled for April or May 2024, potentially reaching around $40,000. The strategists note that Bitcoin’s production cost has historically acted as a significant price floor, and previous halving events in 2016 and 2020 have been followed by bullish trajectories for bitcoin prices.
