Analyzing the factors behind Bitcoin’s recent rally

• The smaller-than-expected U.S. Treasury supply estimate for Q1 2024 and Fed’s dovish policy aided the rise.
• Market participants were bullish on Bitcoin at the time of writing.

The crypto market was buzzing with excitement as Bitcoin [BTC] broke through the $35,000 level after more than 17 months. Most market observers and analysts attributed the rip to the optimism over spot ETF approvals.

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Macro factors boosted Bitcoin?

However, contrary to the popular perception, well-known crypto asset trading firm QCP Capital

The Singapore-based company stated that the lower-than-expected U.S. Treasury supply estimate for Q1 2024 sent the bond markets lower while favoring risky asset classes.

Indeed, the yield on the 10-year U.S. government bond dropped over the week. Typically, higher yields on risk-free government debt harms demand for speculative assets like stocks and cryptos.

Moreover, the recent decision by the U.S. Federal Reserve not to raise the interest rates applied significant upward pressure on stocks and cryptos, QCP Capital said. Historically, crypto market has been known to react positively to such dovish monetary policies.

However, QCP Capital cautioned that the broader sentiment was upbeat, and that it might be too early to celebrate.

“Whether this marks the start of a new global equity and bond uptrend remains to be seen, as the macro picture essentially remains unchanged, outside a correction of overly bearish bond sentiment.”

Bitcoin beats other assets in risk-adjusted returns

Regardless of the reasons for the surge, Bitcoin was establishing itself as one of the most appealing investment vehicles. AMB Crypto scrutinized the Sortino Ratios of a diverse range of asset classes from IntoTheBlock.

It was discovered that Bitcoin had the highest value at 1.68, outperforming other equity and dollar indices.

For the uninitiated, the Sortino ratio compares the performance of the asset relative to its downside risk. A higher ratio meant that investors were more likely to park their money with the king coin.

Source: IntoTheBlock

Read BTC’s Price Prediction 2023-24

More gains on the way?

At the time of writing, BTC was exchanging hands at $34,262, with impressive gains of 24% over the last month, according to CoinMarketCap

The market sentiment was tilted towards greed as per the latest reading from the Bitcoin Fear and Greed Index. This implied that the traders were in a mood to buy more and the market was trending upwards.