As Bitcoin surged past the $64,000 level early Monday, marking a 10% increase over the past week, analysts have pointed to an array of catalysts fuelling the momentum.
They range from last week’s Fed interest rate cuts and increased demand for Bitcoin ETFs to bipartisan political support. Even if the reasons differ, analysts seem to agree they’ll drive a rally and set the stage for even higher prices in the months ahead.
Bitcoin (BTC) is trading at $63,520, up 1.2% in early European trading hours and about 10% over the past one week. Ethereum (ETH) is trading up 2.4% at $2,650, gaining about 15% in the last seven days, according to CoinGecko data.
One of the primary drivers behind Bitcoin’s rally is the Federal Reserve’s recent decision to cut interest rates by 50 basis points, which weakened the U.S. dollar and made BTC an attractive hedge against inflation and fiscal uncertainty. With U.S. fiscal debt hitting $35 trillion and rising by $1 trillion every 100 days, Bitcoin is being increasingly viewed as a store of value similar to gold.
"Any signal of looser monetary policy and a potentially weaker dollar is positive for Bitcoin," Bernstein analyst Gautam Chhugani said, noting that year-to-date, BTC has surged 45%, outpacing gold's 27% rise.
Political developments have also bolstered sentiment. At a New York fundraiser over the weekend, U.S. Vice President Kamala Harris expressed support for digital assets and made her first public mention of the crypto industry.
This follows former President Donald Trump’s pro-crypto stance, which has advocated for friendlier regulations. While the crypto community remains cautious about Harris’s position, Bernstein analysts believe her acknowledgment, alongside Trump’s support, suggests bipartisan backing that could lead to more regulatory clarity.
The momentum of Bitcoin ETFs continues to be a significant factor as well. Despite recent price fluctuations, Bitcoin ETF flows have remained net positive, with total inflows standing at $17 billion. Bernstein reports that "new approvals by wirehouses (recently Morgan Stanley went live) would continue and with some gestation period for advisors to solicit clients, we expect re-acceleration of inflows."
The stability of BTC miners post-halving has also contributed to the positive sentiment.
Bitcoin halving events, which reduce the block reward for miners, often lead to a period of instability in the mining sector. However, after one full quarter following the April 2024 halving, the network’s hash rate has returned to pre-halving levels, signaling that the market has absorbed the impact.
Additionally, major Bitcoin sell-offs appear to be over, providing a clear runway for further price appreciation. Both the German government and the Mt. Gox trustees, which had large Bitcoin stashes, have completed their sales, with the market absorbing over $11 billion worth of Bitcoin without any significant price disruptions.
Meanwhile, MicroStrategy, a key institutional player, raised an additional $2.1 billion to buy more Bitcoin, increasing its holdings to 252,220 BTC, or about 1.3% of the total Bitcoin supply. Echoing Bernstein’s optimism, crypto analyst firm 10x Research emphasized the importance of Bitcoin’s cyclical nature and the upcoming seasonal patterns that have historically driven the market higher.
"Bitcoin’s previous bull markets peaked between October and March, and we’re expecting a major breakout in Q4 2024," Markus Thielen, Head of Research at 10x Research said. He added that key levels, such as the previous cycle high of $68,330, will be critical in determining whether BTC reaches new all-time highs.
In addition to these cyclical factors, the 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 act as significant catalysts.
"We expect $5-8 billion to flow back into the crypto space, which could further fuel Bitcoin’s rise," the 10x analyst explained.
MicroStrategy’s aggressive Bitcoin purchases signal strong demand, and as more companies follow its lead, this could amplify Bitcoin’s upward momentum. The overall market is also likely to benefit from increased adoption by traditional finance (TradeFi) investors, who see Bitcoin as a valuable hedge in uncertain times.
Edited by Stacy Elliott.