Bitcoin traders aim to regain the $70,000 level reached in June, after a temporary market dip on Friday. This dip was offset by steady inflows into U.S. exchange-traded funds, supporting the cryptocurrency’s recovery. “This aligns with recent trends we’ve observed,” stated Stephane Ouellette, CEO and co-founder of FRNT Financial. He added, “As a global liquidity cycle begins, we expect lower interest rates and fiscal policy support for Bitcoin’s sustained growth.” Such conditions could favor Bitcoin’s momentum, drawing more investors into the cryptocurrency market.
Market Reactions to Regulatory Scrutiny
Cryptocurrencies saw a downturn last week after reports of a U.S. investigation into Tether Holdings Ltd. for sanctions and anti-money-laundering violations. Tether responded, stating it was unaware of any active investigation. Stablecoins, including Tether, are essential in crypto markets, enabling fiat exchanges for tokens like Bitcoin. Additionally, they often serve as collateral in crypto lending activities. Notably, Tether remains the world’s most actively traded cryptocurrency, underscoring its market significance.
Political Climate Fuels Interest in Bitcoin
Bitcoin’s rising popularity aligns with the approaching U.S. presidential election, sparking heightened interest across digital asset investments. Last week’s inflows reached $910 million, boosting the annual total to $27 billion, nearly triple the 2021 record, per CoinShares. “We view Bitcoin prices and inflows as significantly impacted by U.S. political trends,” observed James Butterfill, head researcher at CoinShares. Recent inflows may reflect growing Republican momentum, further connecting digital asset growth with election dynamics.
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Diverging Fortunes Bitcoin vs. Ethereum
Bitcoin absorbed most inflows, while Ethereum, the second-largest digital currency, experienced $35 million in outflows, marking a significant asset shift. Options traders show growing optimism, betting Bitcoin will reach $80,000 by late November, regardless of election results. Implied volatility on Bitcoin options maturing near the Nov. 5 election is high, reflecting traders’ bullish sentiment. Many investors are betting on call options, anticipating potential new price peaks as Bitcoin’s momentum intensifies in coming months.
Renewed Momentum Following Historic Highs
Bitcoin reached a historic high of $73,797 in March, fueled by expectations that ETF demand could surpass the available supply. Despite a 30% price drop by early August, a renewed bullish trend has reignited investor interest and momentum. Last week, hedge fund manager Paul Tudor Jones endorsed Bitcoin, highlighting it as a hedge against inflation amid fiat currency concerns. “This trend will continue supporting Bitcoin, as new investors are increasingly allocating portfolio portions to the asset,” added Ouellette.
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