Over the last week, the world’s bellwether cryptocurrency Bitcoin has gone through several historic price peak, ending up so far at an all-time high of $87,032 per coin. On Monday alone, there were three record price peaks.
BTC’s recent surge to new peaks has been driven by a staggering mix of factors related to politics, economy, and financial markets. The leading crypto has demonstrated resilience and impressive growth as it benefited not only from the increase in investor confidence but also from favorable events that have taken place in the US just recently.
Trump Contributing to Bitcoin Price Surge
One of the strongest drivers for the Bitcoin price acceleration lately has been the Donald Trump’s victory in the elections where he won after accepting donations in BTC and various altcoins and made several important statements, promising that the US would officially embrace BTC and even create a strategic Bitcoin Reserve, buying 1 million BTC over the next five years. Each year, he said in July, the US government would purchase 200,000 BTC. This would constitute a little less than 5% from the total 21 million Bitcoin supply.
Trump, being a rep of the Republican party, scored a confident victory over the Democratic party candidate Kamala Harris, who made just a few feeble statements in an attempt to connect with the vast community of American crypto holders.
Read More: Top Trading Strategies in the Crypto Bull Market
Trump demonstrated a stark shift from his previous skeptical position about digital assets and Bitcoin in particular. He made promises to loosen up regulations around the cryptocurrency sector, creating a more supportive and growth-oriented environment not only for Bitcoin but also for the whole crypto space. He also promised to release the founder of the darknet marketplace The Silk Road Ross Ulbricht from his double life-time sentence from which Ulbricht has already spent roughly ten years behind bars.
Crypto experts believe that Trump’s approach towards crypto adoption and crypto regulation could help the US to compete for a leadership in the sphere of digital finance, which could potentially attract more institutional money into Bitcoin and raise its market value significantly.
Other Reasons that Pushed BTC Up to $87,000
However, Trump’s victory in the elections was not the only driver that fueled the massive Bitcoin price rally. Another powerful trigger for that was another interest rate cut facilitated by the Federal Reserve after that. While in September the cut was massive and comprised 50 basis points, this time it was only 25, and gave the Bitcoin price a great boost as well. This was yet another shift from the aggressive rate hikes the US has seen since 2020 which were intended to tame inflation.
Now that borrowing costs have been brought down significantly, investors have again become more inclined to dip into assets that bear greater risks and also promise bigger rewards. Bitcoin is among them, as well as gold. Besides, the rate cut created an intensive liquidity boost, directing a massive capital flow into the market, which pushed assets’ prices way upwards. The Federal Reserve chairman Jerome Powell has been hinting at reducing the rates since last November. Once the first one took place in September, Bitcoin did not respond immediately. However, boosted by the election results, it skyrocketed after the rates were slashed for the second time this year. It also underscores Bitcoin’s appeal as a hedge against inflation and uncertainty in the markets.
One more reason for the recent Bitcoin price boost has been its increased correlation with the high-risk stocks and the S&P 500 in particular. Bitcoin’s 60-day correlation with it has reached 0.6, which is indicative that BTC is currently moving in a stronger connection with the stock market.
Bitcoin’s Prospects This Year
Bitcoin has always been viewed as an independent class asset with many investors referring to it as “digital gold.” However, this time, per Bloomberg’s chief expert Mike McGlone, BTC is rather behaving as a high-beta asset, which is a leveraged version of traditional risk assets. While investors are pouring capital into the stock market now, Bitcoin is getting its own share of these inflows.
This also means that Bitcoin now is largely under the impact of macroeconomic factors, which affect equities markets – corporate earnings, the Fed Reserve policy, etc. This largely suggests that currently the BTC price is ruled by conventional financial trends and is likely to obey to the same market forces that are driving equities.
If Bitcoin continues to grow at such a fast pace as now, many experts and investors, like Michael Saylor, Robert Kiyosaki, Anthony Scaramucci, etc, believe that by the end of 2024, it will be able to hit the much expected $100,000 line. Especially, if Trump upon taking the Oval Office from Joe Biden indeed turns his boastful promises about crypto regulation and strategic Bitcoin reserve into reality and if the Fed continues to increase its dovish market stance.
