Bitcoin and Ethereum Rallied as Investors Turned to Crypto Amid a Weak Financial Climate

Bitcoin reached an intraday high of $97,437.96, then fell to roughly $96,500 before making a fresh move past $97,000 overnight.

Crypto traders awoke Thursday morning to a refreshing scene: Bitcoin had breached the $97,000 mark, sparking a broader rally across the cryptocurrency market. This surge followed reports of a contraction in the U.S. economy during the first quarter, potentially prompting investors to seek refuge in Bitcoin as a safe haven asset.

However, traders were quick to point out that the Bitcoin price movements were not entirely unexpected.

"Expecting a move towards $100k on BTC, but not necessarily a straight shot. Some consolidation at the $95k support is possible before continuing higher," said Ben Armstrong, host of the Armstrong & Associates podcast, in a post on X, formerly known as Twitter.

Indeed, Bitcoin had already touched the $95,000 level on Wednesday following a strong rally in the latter half of the day. This rally was fueled by a surge in trading volume, which reached $16 billion on Binance alone, and a massive liquidation of cryptocurrency derivatives positions.

At its peak, Bitcoin reached an intraday high of $97,437.96 in the early trading hours, but it later fell to around $96,500 in the afternoon before making a fresh move past $97,000 overnight.

On the other hand, Ethereum reached a high of $1,872.94 before pulling back to $1,835, while Bitcoin's market dominance rose to a yearly high of 63.8%, showcasing greater investor preference for the "King Coin."

The U.S. economy contracted at an annualized rate of 1.0% in the first quarter, according to the Commerce Department's preliminary estimate of gross domestic product. This follows a 4.0% expansion in the fourth quarter of 2023.

The downshift in GDP was largely anticipated by economists, who predicted a 1.1% decline, and it brought the year-over-year increase in GDP to 3.3% in the first quarter.

Moreover, consumer spending, which constitutes about 70% of economic activity, decreased at a 0.3% rate in the first quarter. Economists had expected consumer spending to rise 0.1%.

The decrease in consumer spending was attributed to a decline in spending on goods, which fell at a 0.9% rate after surging in the prior quarter. Spending on services advanced at a 0.6% rate.

The report also revealed a sharp decrease in business investment, with equipment spending dropping at a 39.8% pace. Economists had anticipated a modest increase of 0.5%.

"The report is a mixed bag overall, with some positive signs of strength in the labor market and inflation, but also some concerning signs of weakness in consumer spending and business investment," said Paul A. Schmiede, a professor of economics at the University of Pittsburgh.

"The report suggests that the Federal Reserve may have some room to continue raising interest rates if needed to tame inflation."

In other economic news, the Labor Department reported a modest rise of 0.3% in the employment cost index, a broad measure of labor compensation, in the first quarter. This follows a 1.0% increase in the fourth quarter and aligns with economists' predictions.

The I.C.E. Bank Energy futures rose 0.8% to $80.43 a barrel, while the I.C.E. WTI crude futures advanced 1.2% to reach $74.33 a barrel.

Later today, investors will focus on the latest report on the J.P. Morgan (NYSE:JPM) Consumer Price Index (CPI), which is expected to show a 0.3% monthly increase in March and a 3.8% year-over-year rise. Economists will also provide their predictions for first-quarter GDP and consumer spending.

Stay tuned for more updates and analysis on Bitcoin's performance and the broader cryptocurrency market trends.

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Analyst Notes:

Seasoned trader Peter Brandt sees Bitcoin on target to reach the bull cycle top between $125,000 and $150,000 by August or September if it can "regain the broken parabolic slope," from which there would be a 50% pullback. Typically, parabolic slope patterns are characterized by a steep, rapid, and exponential rise in price, followed by a sharp decline.

"Hey @scottmelker If Bitcoin can regain the broken parabolic slope then $BTC is on target to reach the bull market cycle top in the $125k to $150K level by Aug/Sep 2025, then a 50%+ correction," the trader wrote in a post on X.

Cryptocurrency trader and analyst CryptoBullet stated that Ethereum's mid-term correction