Bitcoin’s recent surge, pushing past $64,000 with a 10% rise in just a week, has analysts predicting even greater heights for the cryptocurrency. Several catalysts are fueling the current rally, ranging from Federal Reserve rate cuts to growing demand for Bitcoin ETFs, and even bipartisan political support in the U.S.
Bitcoin (BTC) is trading at $63,520, up 1.2% in early European hours, while Ethereum (ETH) has risen by 15% over the past week to $2,650, according to CoinGecko data. Analysts see this as just the beginning of a potential bull market.
The Federal Reserve’s decision to cut interest rates by 50 basis points is one of the primary drivers of Bitcoin’s rally. The weaker U.S. dollar, resulting from this monetary easing, has made Bitcoin more attractive as a hedge against inflation and fiscal instability. With the U.S. national debt climbing to $35 trillion and growing by $1 trillion every 100 days, Bitcoin is increasingly seen as a store of value similar to gold.
“Any signal of looser monetary policy and a potentially weaker dollar is positive for Bitcoin,” said Bernstein analyst Gautam Chhugani, noting that BTC has surged 45% this year, outpacing gold’s 27% rise.
Political developments are also contributing to the bullish sentiment. U.S. Vice President Kamala Harris recently expressed support for digital assets at a New York fundraiser, while former President Donald Trump has long advocated for crypto-friendly regulations. This bipartisan backing, according to Bernstein, could lead to more regulatory clarity for the industry.
Bitcoin ETFs are playing a significant role in the rally as well. Despite recent fluctuations, ETF inflows have remained positive, with $17 billion flowing into Bitcoin ETFs this year. Analysts expect continued inflows as major financial institutions, like Morgan Stanley, expand their offerings to clients.
The stability of Bitcoin miners post-halving is another positive indicator. Bitcoin’s halving event in April 2024 initially caused some instability, but the network’s hash rate has since rebounded to pre-halving levels, signaling that the market has absorbed the impact.
Additionally, large-scale sell-offs, such as those from the German government and Mt. Gox trustees, have concluded without causing significant market disruptions. Over $11 billion worth of Bitcoin was sold, and the market absorbed it smoothly.
MicroStrategy, one of Bitcoin’s biggest institutional backers, has also bolstered market confidence. The company raised an additional $2.1 billion to increase its Bitcoin holdings to 252,220 BTC, representing 1.3% of the total Bitcoin supply.
Crypto analyst firm 10x Research and Bernstein are optimistic about Bitcoin’s cyclical nature. Markus Thielen, Head of Research at 10x Research, expects a major breakout in Q4 2024, noting that previous bull markets have peaked between October and March. Key levels to watch include Bitcoin’s previous all-time high of $68,330.
The upcoming U.S. Presidential election in November and the anticipated distribution of $16 billion in funds from FTX creditors between December 2024 and March 2025 could further drive Bitcoin higher. Analysts expect $5-8 billion to flow back into the crypto market during this period.
With institutional demand rising and more companies following MicroStrategy’s lead, the outlook for Bitcoin remains highly bullish. Traditional finance (TradeFi) investors are also showing increased interest, viewing Bitcoin as a valuable hedge in uncertain economic times.