Bitcoin (BitfinexUSD) settled around $72,000 on Thursday, trading above this level for the first time in almost a month after a broad rise boosted cryptocurrency and related stock markets the previous day.
The largest cryptocurrency in the world rose by more than 6% on Wednesday, recovering after spending most of the last several weeks trading below the $70,000 level. This movement brought Bitcoin closer to regaining its status as a geopolitical hedge as tensions in the Middle East remain high.
Track the latest BTC price predictions with InvestingPro
Part of the increase was driven by renewed institutional demand. Bitcoin exchange-traded funds attracted about $1.1 billion in net inflows over three trading sessions from March 2 to March 4, according to data collected by fund trackers including Farside Investors and CoinGlass.
Incoming flows represent a reversal after weeks of outflows earlier this year that weighed on sentiment towards the asset. On March 4 alone, Bitcoin exchange-traded funds recorded approximately $461.9 million in net inflows, with IBIT from BlackRock Inc (NASDAQ:IBIT) accounting for $306.6 million of that total, as data from CoinGlass shows.
Despite the recent rebound, Bitcoin declined for five consecutive months from October to February, marking its longest losing streak in years.
After this decline, Investing.com spoke with American entrepreneur and cryptocurrency investor Michael Terpin to discuss the forces currently driving the market and where the largest cryptocurrency in the world could head in the coming months.
Terpin, one of the early thought leaders in Bitcoin and cryptocurrency, was dubbed "the crypto godfather" by CNBC for his advisory and marketing work in many early industrial projects.
1) How much do macroeconomic forces stand behind Bitcoin's recent weakness?
"The key driver in the extended four-year cycle is the ongoing effects of the halving. In every cycle so far, Bitcoin has acted in very predictable ways - reaching a new all-time high within seven months after the halving, then that bubble bursts within 11 months, starting a slow and painful decline in price that capitulates after about a year."
"Macroeconomic forces so far have simply accelerated or clipped the peak, but they have not had a significant impact on the bottom, which usually occurs after a notable bankruptcy or disruption rooted in excessive leverage by large institutions, be it MtGOX in 2014 or FTX in 2022."
2) Exchange-traded fund inflows were a major tailwind earlier in the cycle. What do you see now in terms of institutional demand, and how does the outlook for institutional participation look in the future?
"ETFs have partially mimicked first-generation retail buyers in that they tend to sell at the top, but there are also professional traders using ETFs to gain additional leverage and institutions like Harvard buying their Bitcoin in the form of ETFs, so there shouldn't be panic selling at the bottom in the way that has always been the case with new retail traders."
3) Bitcoin dropped about 15% in February, marking its longest losing streak in years. Should investors prepare for more weakness in the coming months?
"Indeed, February recorded five consecutive months of losses, many of which were in double digits. The four-year cycle history showed a similar pattern after the bubble burst, but it had an up month in March in every other cycle, so it is reasonable to expect that March (which started with an upward movement) will be positive."
"However, it is unlikely that the bottom has been reached, and I expect April to be another negative month with the final low of this correction being at least 60% lower than the bubble peak, which would take us to around $50,000 at capitulation."
4) Where do you see Bitcoin trading by the end of the year?
"The path of least resistance is toward lower bottoms until capitulation around $50,000 (bad macroeconomic news, especially regarding cryptocurrencies, for instance, a major bankruptcy of a fund or exchange, could push it down to $40,000 by early fall)."
"The road to the upside is slow, so I don't see Bitcoin much higher than $80,000-100,000 by year-end, but it should be on track for significant gains in 2027 and 2028 and in 2029 until the next bubble bursts. In this case, it's all about supply shock. If demand remains subdued, it will be hard for us to break above $200,000, but if there is strong renewed interest and fear of missing out in the next bull market, it could sail above $300,000, even $400,000. I still expect it to reach a million dollars by 2037, but not in a straight line."