What factors are causing BTC and ETH to rise? How much will they rise next?

Deng Tong, Jinse Finance

This morning, both BTC and ETH surged. According to CoinGecko data, the price of BTC reached a maximum of 110,266 dollars.

The price of ETH reached a high of $2705.80.

What is driving the impressive rise of BTC and ETH? What factors are currently influencing the cryptocurrency market? How high will BTC and ETH rise next?

1. New Trends in Sino-U.S. Economic and Trade Relations: The United States Considers Lifting Export Controls in Exchange for China Easing Rare Earth Export Restrictions

On Monday afternoon local time, the first meeting of the China-U.S. trade negotiation mechanism was held in London, UK. The China-U.S. trade negotiations kicked off in London, with the U.S. side indicating a willingness to lift export restrictions in exchange for China’s commitment to relax rare earth export restrictions.

On the morning of the day before the first meeting of the China-U.S. economic and trade consultation mechanism, CNBC connected with White House Economic Council Director Hassett for an interview. He revealed for the first time that the U.S. government is considering lifting some export controls in exchange for China further relaxing its export controls on rare earths. Hassett stated that this round of talks “won’t be long, but it will be a strong handshake ( a big,strong handshake )”; if China allows large-scale exports of rare earths, “all U.S. export controls will be immediately eased” ( any export controls from the US will be eased ). Subsequently, both sides will continue to address some “smaller matters” ( smaller matters ).

On the 10th, the People’s Daily published an article stating that the true picture of Sino-U.S. economic and trade relations is one of complementary advantages and win-win cooperation. Only by removing the artificially set “iron fences” and facilitating a “two-way road” for economic and trade cooperation can we promote the stable and healthy development of Sino-U.S. economic and trade relations. As the world’s two largest economies, strengthening economic and trade cooperation not only benefits each country’s development but also provides important support for the stability of global industrial and supply chains. We believe that through equal consultation and pragmatic cooperation, China and the U.S. can find mutually beneficial solutions. We hope both sides will work together to create favorable conditions for normal economic and trade activities of enterprises from both countries, allowing the benefits of cooperation to better serve the people of both nations and contribute more significantly to the global economic recovery and growth.

2. SEC Chairman Strongly Supports DeFi

On Monday, in the final session of five cryptocurrency roundtable meetings held by the U.S. Securities and Exchange Commission (SEC), institutional leaders and expert panels discussed regulatory issues surrounding decentralized finance (DeFi).

At the beginning of the roundtable discussion, SEC Chair Atkins talked about how decentralized finance (DeFi) aligns with American values: “The American values of economic freedom, private property rights, and innovation are the core genes of the decentralized finance (DeFi) movement.” Additionally, Chair Atkins emphasized that developers of neutral tools should not be held responsible for the actions of third parties: “Engineers should not be subject to federal securities laws simply for releasing such software code. As one court stated, it is unreasonable to hold developers of autonomous vehicles responsible for third parties using that vehicle to violate laws or rob banks — quoting the court’s ruling, in this case, people would not sue the car company for allegedly facilitating illegal conduct, but would sue the individuals committing the illegal acts.”

The chairman of the U.S. Securities and Exchange Commission, Atkins, stated that the commission is formulating policies to protect decentralized finance (DeFi) platforms from regulatory obstacles.

Atkins has instructed SEC staff to explore modifications to agency rules “to provide necessary facilitation for issuers and intermediaries seeking to manage on-chain financial systems.” Atkins described this potential exemption policy as an “innovative exemption,” allowing entities within the SEC’s jurisdiction to “quickly” bring on-chain products and services to market.

“Many entrepreneurs are developing software applications that can run without any operator management.” While the technology to achieve private peer-to-peer transactions “sounds like science fiction,” he stated, “blockchain technology makes it possible for a whole new kind of software to perform these functions without intermediaries.” “I believe we should not allow century-old regulatory frameworks to stifle innovation, as these technologies could disrupt and, more importantly, improve and advance our current traditional intermediary models. We should not take for granted the fear of the future.”

SEC Commissioner Hester Peirce stated: “The SEC cannot regulate code developers simply because others use the code to engage in activities traditionally regulated by the SEC, thereby infringing upon the rights granted by the First Amendment,” and “centralized entities cannot evade regulation simply by labeling themselves as decentralized.”

The founder of the decentralized exchange ShapeShift, Erik Voorhees, pointed out: “I really appreciate the change in tone and stance of the committee. I think this is absolutely a good thing for the United States.”

For details, see the Golden Finance article: “Latest Speech by the Chairman of the SEC: DeFi and the American Spirit (Full Text)”

3. BlackRock Increases ETH Holdings

BlackRock is quietly accumulating Ethereum, currently holding 1.5 million Ethereum (worth $2.71 billion) and tokenizing assets on-chain. This asset management company has purchased $500 million worth of Ethereum in the past 10 days, reflecting institutional investors’ confidence in this altcoin, despite its price having dropped 48% from its historical peak.

Last week, investment products based on Ethereum led the inflows into cryptocurrency exchange-traded products (ETP), attracting $296 million despite a slowdown in the market as investors awaited regulatory policies from the Federal Reserve. This marked the seventh consecutive week of inflows for the Ethereum ETP, setting a record since Donald Trump won the 2024 presidential election, with Ethereum ETP currently accounting for over 10.5% of the total assets under management in cryptocurrency ETPs. CoinShares also noted a significant rebound in investor sentiment.

4. How Will the Future of the Cryptocurrency Market Develop?

Will BTC rise to $150,000?

Some analysts expect that as the U.S. government is about to raise the debt ceiling by $4 trillion, the price of Bitcoin could rise to $150,000. However, futures market data shows that there is still hesitation in the market in the short term, which may be caused by unfavorable macroeconomic signals and misinterpretation of potential supply shocks to Bitcoin.

Bitcoin 2-month futures annualized premium. Source: laevitas.ch

Since June 6, the Bitcoin futures premium has been hovering around the neutral market typical baseline of 5%. The recent price increase has not sparked significant confidence among traders. However, it is inaccurate to say that market sentiment is entirely pessimistic, especially considering that Bitcoin’s current trading price is only 3% lower than the historical high of $111,965 reached on May 22.

Recent price trends are not driven by excessive leveraged speculation, indicating a healthy market foundation. However, if concerns about an economic recession persist, given the ongoing correlation between Bitcoin and traditional stock markets, it is unlikely that Bitcoin will maintain levels above $110,000.

50-day correlation between Bitcoin/USD and S&P 500 index futures.

Currently, the correlation between Bitcoin and the S&P 500 index is 82%, which means the two assets move similarly. This trend has persisted over the past four weeks. Although the correlation has fluctuated over the past nine months, investors largely still view Bitcoin as a risk asset rather than a reliable hedge.

If confidence in the fiscal stability of the U.S. government declines, risk perception may shift in favor of Bitcoin.

Will ETH rise above 3600 dollars?

Currently, the ETH price has returned to above the middle line of the Gaussian channel (a dynamic market trend indicator). The Gaussian channel or normal distribution channel plots price movements within a dynamic range to accommodate market fluctuations.

Ethereum Gaussian Channel Analysis.

Historically, when Ethereum breaks through the middle line of the Gaussian channel, a rebound occurs. For example, in 2023, ETH surged 93% to $4,000 after breaking through the middle line of the Gaussian channel; whereas in 2020, ETH skyrocketed by 1,820%.

As ETH stabilizes above the key level of $2,570, technical analysis predicts that if the momentum continues, ETH could rise to between $3,100 and $3,600, thanks to the historical accuracy of this channel in predicting short-term gains.