Bitcoin analysts are expressing growing optimism about the cryptocurrency’s price prospects following a rebound toward a significant resistance level that previously halted its gains.

After testing the 50-day simple moving average support around $63,500, bitcoin has sharply risen, surpassing $67,000 BTC/USDT on Gate.io. It is now approaching a resistance line marked by a trendline connecting the highs from March and April. This descending trendline posed a challenge on Monday and had previously been a barrier in May, proving to be a key level for bulls to overcome. Analysts suggest that this resistance might soon be breached.

BTC price catalysts

One potential catalyst is the U.S. core personal consumption expenditures (PCE) price index, the Federal Reserve’s preferred inflation measure, which is set for release at 12:30 UTC (08:30 ET). Additionally, an upcoming speech by Republican presidential candidate Donald Trump at the Bitcoin conference in Nashville could influence the market.

An analyst at a prominent advisory firm, indicated in an email that the incoming PCE data could be pivotal. He mentioned that a favorable PCE reading might lead to imminent interest rate cut announcements. Furthermore, Trump’s speech could trigger a stronger rally, especially if he announces the creation of a national strategic reserve for bitcoin. Fournier believes these factors could drive bitcoin to new highs.

Forecasts suggest that the PCE index will show a 0.1% rise in June, following a flat performance in May and gains of 0.3% in the three months prior. The annualized figure for June is expected to be 2.4%, marking the smallest increase since 2021. Progress toward the Federal Reserve’s 2% inflation target supports the case for interest-rate cuts. Renewed liquidity easing, coupled with resilient economic growth highlighted by recent U.S. GDP data, could boost demand for risk assets, including cryptocurrencies.

Investors are also keenly anticipating Trump’s speech on Saturday, amid speculation that he might announce a greater role for bitcoin in the financial system. Other bullish signals include the increasing mining hashrate, which measures the computing power dedicated to the bitcoin network, and a rise in stablecoin supply, according to crypto services provider Matrixport.

Matrixport’s recent note to clients highlighted that the Bitcoin mining hashrate, a leading indicator for bitcoin rallies, has improved. So instead of reducing inventory, Bitcoin inventories are growing, indicating confidence in future price increases despite some miners shutting down unprofitable machines. The note also pointed out that fiat-to-crypto inflows have increased, as reflected by the recent rise in stablecoin market capitalization. 

How do stablecoins affect BTC price?

The market capitalization of stablecoins plays a significant role in influencing the price of Bitcoin. Stablecoins, which are cryptocurrencies pegged to traditional assets like the US dollar, provide liquidity to the crypto markets and act as a bridge between traditional finance and digital assets. An increase in the market cap of stablecoins typically indicates a rise in the amount of capital that can be easily deployed into cryptocurrencies, including Bitcoin.

When the market cap of stablecoins rises, it suggests that more funds are being parked in these digital assets, ready to be moved into cryptocurrencies as investment opportunities arise. This influx of stablecoins into the crypto ecosystem can lead to increased buying pressure on Bitcoin. Investors often use stablecoins to quickly take advantage of favorable market conditions without the delays associated with converting fiat currencies into Bitcoin. Consequently, a higher stablecoin market cap can lead to a surge in Bitcoin demand, pushing its price upward.

Moreover, stablecoins provide a safe haven for investors during periods of volatility. When the crypto market experiences significant fluctuations, traders may convert their holdings into stablecoins to preserve capital without exiting the crypto ecosystem. As market conditions stabilize or improve, these funds often flow back into cryptocurrencies like Bitcoin, creating additional upward pressure on prices. Therefore, the market cap of stablecoins can be a leading indicator of potential movements in Bitcoin’s price, reflecting the overall sentiment and liquidity within the crypto market.

The market capitalization of stablecoins affects Bitcoin’s price by increasing liquidity and enabling swift capital flows into the crypto market. As more funds are held in stablecoins, the potential for rapid investments in Bitcoin grows, often leading to price increases. Additionally, the role of stablecoins as a safe haven during market volatility ensures that capital remains within the crypto ecosystem, ready to be deployed back into Bitcoin and other digital assets, further influencing their prices.

BTC ETF support

A Bitcoin Exchange-Traded Funds (ETFs) also act as a support to the rise of Bitcoin’s price by providing a more accessible and regulated investment vehicle for a broader range of investors. An ETF allows individuals and institutional investors to gain exposure to Bitcoin without needing to directly purchase, store, or manage the cryptocurrency themselves. It is indeed true that the ETF market has recently been volatile, but what is important to note is that BTC adn ETH rewrite the history of ETFs. Traditional ETFs do not boast high daily traded volumes, and if compared to an average meme coin volume, one may take TradFi ETF as a joke. 

This ease of access can significantly increase the demand for Bitcoin, as it opens up the market to investors who may have been hesitant to engage with the technical complexities and security concerns of handling digital assets. Additionally, the legitimacy and transparency provided by a regulated ETF can attract more conservative investors and large financial institutions, further driving up demand and, consequently, the price of Bitcoin.