The Factor Behind Bitcoin’s Potential to Reach New Highs
The current surge in Gold’s price to an all-time high of $2,509.41 per ounce has led analysts to speculate that Bitcoin might be on the edge of a new peak as well. There are several driving forces behind Bitcoin’s rally which suggest that a new all-time high might be just around the corner. Below are some of the major reasons explaining why Bitcoin is heading towards this crucial milestone.
Whale Accumulation: A significant factor driving the surge in Bitcoin’s price is the continued decrease in BTC exchange balances. Over the last month, exchanges have seen a reduction of 11,317.53 BTC. Major platforms like Coinbase Pro and Bitfinex saw strategic withdrawals, resulting in over 23,000 BTC being accumulated. The substantial outflow indicates that traders are moving their BTC holdings into cold storage, reflecting a strong belief in its long-term value. Long-term holders have also reportedly bought the dip, accumulating over 500,000 BTC since July 30.
M2 Money Supply: With the M2 Money supply reaching all-time highs, more money is entering the economy, implying that there will be greater spending on risk assets like Bitcoin. Historically, when the M2 Money supply has hit all-time highs, Bitcoin has observed significant movement a few months later. The M2 Money supply hit an all-time high in January 2024, and crypto has already started moving in response.
Bitcoin Halving: The previous halving of Bitcoin is another reason why the cryptocurrency might be set for a massive bull run in the near future. After previous halvings, Bitcoin consolidated for a brief period before experiencing remarkable performance increases. In 2012, 2016, and 2024, Bitcoin’s performance saw increases of 8,839%, 285%, and 548%, respectively, a year after the halvings.
Bitcoin ETF Flows: Bitcoin’s recent price momentum has been influenced by significant inflows into BTC ETFs. Spot Bitcoin ETFs recorded a total inflow of $35.9 million on August 16 alone, contributing to a week of positive flows amounting to $32.4 million. Big players like BlackRock, Fidelity, Bitwise, and Ark made substantial investments, with contributions totaling $20.4 million, $61.3 million, $12 million, and $13.4 million, respectively.
Institutional Adoption of Bitcoin ETFs: The institutional adoption of Bitcoin ETFs has gained considerable traction, as evidenced by recent filings and disclosures. Goldman Sachs revealed substantial positions in various Bitcoin ETFs as of June 30, including $238.6 million in iShares Bitcoin Trust and $79.5 million in Fidelity Bitcoin ETF. Morgan Stanley also disclosed its holdings of 5,500,626 shares of BlackRock iShares Bitcoin Trust, valued at $187.79 million. With the spot Bitcoin ETFs and the ETH ET approved, the likelihood of other ETFs emerging is high, making it easier for institutions to invest through ETFs.
Upcoming Presidential Elections: The forthcoming US Presidential Elections are also influencing market sentiment. With Donald Trump’s pro-crypto stance and Kamala Harris’ crypto reset, this could be another factor driving Bitcoin’s bullish trend. Historically, elections have been crucial moments for financial markets, often leading to increased volatility.
Fed Rate Cut Expectations: The expectation of a potential Federal Reserve rate cut is another significant factor driving Bitcoin’s price. Market participants are increasingly betting on a rate cut at the upcoming FOMC meeting. According to the CME FedWatch Tool, there is a 75% probability of a 25 basis point cut, while 25% of market participants expect a 50 bps cut. A rate cut would likely weaken the US dollar and bolster assets like BTC.
These are some of the key factors that could potentially propel Bitcoin to its next all-time high, driving a bullish run in the market.
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