Bitcoin Surges Past $65,000 Amidst Favorable Macro Trends

Cryptonews Dante Raeburn October 2, 2024

Bitcoin Surges Past $65,000 Amidst Favorable Macro Trends

Bitcoin surged past $65,000 today, influenced by macroeconomic factors including the Federal Reserve’s recent rate cut and Chinese fiscal stimulus. The S&P 500 also reached an all-time high. Analysts believe that both macroeconomic trends and institutional interest are driving this surge, alongside historical performance patterns showing Bitcoin’s strength in October.

Bitcoin experienced a significant rally today, reaching its highest value since July as key global macroeconomic factors drove gains in risk-related assets. According to Coinbase data provided by TradingView, Bitcoin was priced close to $66,000 in the afternoon, marking a notable increase. Additionally, major U.S. stock indices rose, with the S&P 500 reaching an all-time high as indicated by Google Finance data. The Dow Jones Industrial Average and Nasdaq Composite also saw gains throughout the day. Tim Enneking, managing partner at Psalion, observed that the strong correlation between Bitcoin and the S&P 500 contributed to Bitcoin breaking through the $65,000 mark. Analysts attribute this price appreciation to a variety of macroeconomic influences, including last week’s Federal Reserve rate cut and recent stimulus announcements from the Chinese government. John Haar, managing director at Swan Bitcoin, stated that Bitcoin’s rising price reflects broader macroeconomic trends, including persistent U.S. fiscal deficits and the Fed’s loosening monetary policy. He noted that these shifts enhance global liquidity, benefiting risk assets such as Bitcoin. Furthermore, Mike Marshall, a senior researcher at Amberdata, explained that Bitcoin’s surge past $65,000 is a result of both macroeconomic developments and heightened institutional interest. He highlighted that the recent 50 basis point rate cut by the Federal Reserve, lowering the federal funds rate to between 4.75% and 5%, has injected optimism into speculative markets like Bitcoin. Marshall also remarked on the potential impact of the SEC’s approval of options for BlackRock’s iShares Bitcoin Trust, which may create new institutional investment opportunities and could lead to increased price activity through a gamma squeeze as demand for options rises. Additionally, Eliézer Ndinga, Vice President and Head of Strategy and Research at 21Shares, provided further context by discussing Bitcoin’s historical performance during September and October. Ndinga pointed out that Bitcoin usually performs poorly in September, averaging a -6% return, but this trend often shifts in October, with an average increase of 10-15% over the past decade. This seasonal trend, often referred to as the “October effect,” corresponds with heightened market activity and improved sentiment as the year comes to a close.

The recent surge in Bitcoin’s price can be attributed to several intertwined macroeconomic factors including monetary policy adjustments by the U.S. Federal Reserve, fiscal stimulus from the Chinese government, and strong correlations with equity markets like the S&P 500. Alongside these developments, historical performance patterns indicate that Bitcoin tends to perform better in the months of October compared to September, further supporting the recent price rally.

In conclusion, Bitcoin’s rise past the $65,000 threshold is primarily driven by significant macroeconomic developments including the Federal Reserve’s interest rate cuts, stimulus efforts observed in China, and an overall increase in institutional interest. Additionally, historical trends suggest that Bitcoin often experiences favorable performance in October. This combination of contemporary and historical factors bodes well for the cryptocurrency’s valuation heading into the final months of the year.

Original Source: www.forbes.com