Ark Invest isn’t worried about the Fed as analysis shows Bitcoin bull run is in ‘early to mid stages’

The Bitcoin rally is steaming ahead and shows no signs of slowing.

That’s the takeaway from Ark Invest’s latest Bitcoin market report, published Wednesday.

The report came hot off the press as new US inflation figures slashed hopes that the Federal Reserve will cut interest rates.

Even so, Ark Invest is not the only Bitcoin watcher to remain bullish.

Ark Invest

Bitcoin has exploded this year, reaching a new all-time high of $73,000 in March.

Ark invest says this is only the beginning.

“Compared to past cycles, its MVRV Z-score suggests that Bitcoin’s price is in the early-to-mid stages of a bull market,” Cathie Wood’s investment management firm wrote.

MVRZ Z-score is a commonly used metric to identify periods when Bitcoin is either undervalued or overvalued.

MVRV stands for “market value to realised value.” The Z-score is a standard deviation test that pulls out the extremes in the data between market value and realised value.

The metric looks at three factors: Bitcoin’s current market value, the realised value, and the Z-score.

The realised value is the average price of each Bitcoin when it was last sent between wallets, multiplied by the total number of coins in circulation.

Ark Invest was also bullish about Bitcoin scaling solutions — such as roll-ups and sidechains — which have gained momentum since the second half of 2023, counting “more than 50 independent projects” building on the Bitcoin base layer.

“Given Bitcoin’s price appreciation and increasing venture capital commitments, these trends could continue in the current bullish cycle,” Ark Invest said.

Inflation figures

Ark Invest’s report came mere hours after new data showed that US inflation is accelerating. That could be bad news for cryptocurrencies.

“Higher inflation may kill any hopes that interest rates would be cut any time soon,” Hans-Stefan von Hänisch, director and Singapore head of sales trading at crypto exchange OS, told DL News.

“This directly impacts market liquidity and risk tolerance, so in theory it can restrict speculative trading activity in crypto markets.”

However, he added that “bullish narratives within the crypto space” — such as the buzz around the upcoming halving event and the growth of US spot Bitcoin exchange-traded funds — “may help support prices in the short to medium term.”

Similarly, Sean Stein Smith, an associate professor of accounting at Lehman College in New York, told DL News that “higher rates will continue to encourage investors to seek out high-performing assets like Bitcoin.”

Crypto market movers

• Bitcoin was up 2.1% over the past 24 hours to $70,430.
• Ethereum is up 1.2$ to $3.550.

What we’re reading

• How Bitcoin’s record run could ignite a $2.5bn ‘powder keg’ of short interest — DL News.
• Former FTX Executive Ryan Salame’s Sentencing Rescheduled To May 28 — Milk Road.
• Worldcoin Adds Privacy Features as Regulators Crack Down on Project — Unchained.
• Uniswap Labs Receives Wells Notice From SEC — Milk Road.
• Circle says market size isn’t everything as its stablecoin trails Tether’s USDT — DL News.

Eric Johansson is DL News’ News Editor. Got a tip? Email at eric@dlnews.com.