Bitcoin Eyes $78K as US Military Calls Proof-of-Work a “Power Projection” Tool

Quick overview

Bitcoin BTC/USD climbs past $77,000 as a US admiral calls it a national security asset, Strategy makes a $2.5B purchase, and the Fear & Greed Index hits a 3-month high.

A General Makes the Case for Bitcoin

During a Senate Armed Services Committee hearing about the US’s strategic position in the Indo-Pacific, Admiral Samuel Paparo of the US Navy called Bitcoin “a valuable computer science tool” and a way to “project power.” His comments went beyond the conventional reasons for Bitcoin as a store of value. They were aimed at a committee that was already looking at concerns from China, North Korea, and cyber enemies. Paparo said that Bitcoin’s proof-of-work algorithm “imposes more cost” on attackers who want to get into the network. This makes it useful for cybersecurity in a number of ways. He added, “Anything that helps the United States of America use all of its national power is good.”

The views are similar to what Jason Lowery, a member of the US Space Force, said in 2023. He said that proof-of-work blockchains may be used to protect “all forms of data, messages, or command signals,” not just money. Senator Tommy Tuberville asked Paparo a question on how China’s top monetary think tank now sees Bitcoin as a strategic asset. This shows that the Bitcoin argument is becoming more political and has effects that go beyond the crypto markets.

Strategy and ETFs Tighten BTC Supply

Strategy said that it bought 34,164 BTC for more over $2.5 billion, making it the third-largest weekly buy on ever. The buy took up more than two months’ worth of post-halving miner issuance, which made the supply tighter at a time when US spot Bitcoin ETFs were already seeing inflows for the fifth day in a row. BlackRock’s IBIT was the best-performing ETF, adding $238 million on April 20 alone. A short squeeze happened because institutional capital stayed consistent and short positions built up. This caused $93.53 million in BTC liquidations, mostly from bearish bets, which made the price go up even more.

Sentiment Climbs From the Depths

Sentiment has gotten a lot better, even though it’s still cautious. The Bitcoin Fear & Greed Index was at 33 on Wednesday, which is still in the “fear” range, but it’s the highest it’s been since January 19. The indicator had dropped to 21 just a few days ago, on April 17, which is what analysts label “extreme fear.” Historically, that level, which is 25 or lower, has been the worst time for investors, and it has also been the lowest point in the market in the past.

Wall Street Eyes a $1 Million Bitcoin

Looking ahead, billionaire Anthony Scaramucci made a bullish case for the commodity this week, saying that Bitcoin’s market cap might someday reach $21 trillion. This means that each of the 21 million coins in circulation would be worth $1 million. He said that Bitcoin’s fixed supply, its rising institutional footprint, and its network being up for more than 16 years are all signs of a trust model that is as good as gold, which has a market cap of almost $33 trillion. Morgan Stanley started its own spot Bitcoin ETF on April 8, while Goldman Sachs is said to be in the midst of filing for its own product. This shows that Wall Street is becoming more interested in this type of investment.

Bitcoin Price Outlook

In the short term, Bitcoin is going to have to pass a test. Resistance is at the latest swing high of about $78,320. A significant breakout might lead to the $81,950 area. There is a lot of support in the $75,000 to $75,500 range. Analysts say that the asset still has room to run until it becomes overbought, with the 7-day RSI at 63.75. However, the direction of the asset may depend as much on geopolitical events, such as success in talks to end the Iran war, as on any chart pattern.

ABOUT THE AUTHOR See More

Arslan Butt

Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

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