On October 16, the Bitcoin (BTC) price temporarily surpassed the $68,400 mark, the highest level since August, but maintaining this level has been more difficult than expected. Bitcoin is currently trading below $67,500, the key question is whether the BTC price can regain its upward momentum.
Stronger-than-expected economic data in the US has reduced investors' appetite for alternative hedging instruments, while TSMC's stable earnings report has shifted traders' attention to the stock market.
The macroeconomic environment plays a crucial role in Bitcoin's inability to sustain the $68,000 level. However, a specific event in the cryptocurrency industry has sparked expectations of a more crypto-friendly stance from the current Biden-Harris administration.
Will a strong US economy negatively impact Bitcoin prices?
The US Department of Labor reported on October 17 that the number of initial jobless claims fell by 19,000 in the week ending October 12. This data is an indicator of layoffs in businesses and shows the economy remains relatively strong. Additionally, the US Census Bureau announced that retail sales in August increased 0.4% from the previous month.
Jonathan Millar, a senior economist at Barclays, told Yahoo Finance that "consumer spending, net hiring, and payroll income have been in a virtuous self-reinforcing cycle throughout this expansion." Higher spending is generally seen as a net positive for corporate profits, thus favoring the stock market over Bitcoin.
S&P500 (left) vs. Bitcoin/USD (right). Source: TradingView
The S&P 500 index rose on October 17, driven by Nvidia (NVDA), whose stock gained 3% to an ATH. This upswing followed the strong Q3 results and raised revenue guidance for 2024 from Taiwan Semiconductor (TSMC), a major AI chip supplier. TSMC's stock surged 13%, attracting investor attention and capital.
While there is debate over whether Bitcoin competes directly with tech stocks, a portion of its value stems from risk-on trades, where investors seek profits in areas that typically benefit from increased market liquidation. This effect has been more pronounced as Bitcoin exchange-traded funds (ETFs) have surpassed $50 billion in assets under management.
Bitcoin's momentum may shift if Ripple wins its lawsuit
A key event in the cryptocurrency market that could signal a more positive regulatory stance from the Biden administration is a legal victory for Ripple. Analysts suggest that the US Securities and Exchange Commission (SEC) may have missed the deadline to file an appeal in the Ripple lawsuit, and if the SEC does not submit the paperwork, Ripple could request a ruling in its favor.
The SEC accused Ripple of conducting an unregistered securities offering by selling the XRP Token (XRP), violating federal securities laws. However, other analysts argue that the SEC filed the appeal on October 2, setting the deadline to submit the appeal paperwork on October 18.
On one hand, stronger-than-expected macroeconomic data is not favorable for Bitcoin prices in the short term. On the other hand, if the SEC loses its appeal in the Ripple case, investors are likely to view this as a positive signal, potentially reigniting the price momentum.
