5 Reasons Driving Bitcoin’s Recent Rally

Bitcoin has experienced a significant rise, seeing a 10% increase over the past week and currently trading around $64,000.

According to a recent note from Bernstein, several factors are contributing to this surge, driven by both macroeconomic changes and shifts in market sentiment.

Here are five key reasons behind Bitcoin’s latest rally as outlined by Bernstein:

1. Rate Cuts and Inflation Hedging
The recent 50 basis point rate cut by central banks has influenced markets, with Bitcoin benefiting from a weaker dollar and loose monetary policy. Bernstein notes that Bitcoin, similar to gold, is regarded as a non-sovereign asset, gaining appeal during periods of fiscal excess, particularly as U.S. debt levels reach $35 trillion. Year-to-date, Bitcoin has increased by 45%, outperforming gold, which has risen by 27%.

2. Growing Bipartisan Support for Crypto
The political landscape surrounding cryptocurrency is shifting as bipartisan support gains traction. Recently, Vice President Harris expressed support for digital assets at a New York City event, marking the administration’s first clear endorsement of cryptocurrency. Bernstein suggests that a potential Trump victory could further accelerate pro-crypto policies, while institutional interest in major assets like Bitcoin is expected to remain robust regardless of the election outcome.

3. Bitcoin ETF Momentum
Institutional interest in Bitcoin ETFs has remained strong. Bernstein reported that in the last 10 days, Bitcoin ETFs attracted $800 million in inflows, even amidst volatile price movements. The firm anticipates that more financial institutions, like Morgan Stanley, will launch Bitcoin ETFs, likely increasing inflows as advisors promote these options to clients.

4. Miner Stability Post-Halving
Bitcoin miners have reportedly adjusted to the April 2024 halving event, stabilizing their operations. Bernstein highlights that network hash power has rebounded, indicating miner resilience and further strengthening Bitcoin’s foundation.

5. Reduced Selling Pressure
The market appears to have absorbed significant Bitcoin sales from the U.S. and German governments, as well as distributions from Mt. Gox. Furthermore, MicroStrategy has raised $2.1 billion to acquire more Bitcoin, increasing its holdings to 252,220 BTC, which represents 1.3% of the total supply.

Overall, these factors align to bolster Bitcoin’s position in the market and may contribute to its continued growth.