This week, bitcoin was trading above US$70,000 for the first time since early June, up 1.54 per cent on Tuesday afternoon to US$70,980.
With a 70 per cent confidence interval, Bitget Research chief analyst Ryan Lee believes the cryptocurrency will stay priced between US$66,000 and US$75,000 through November, citing interest rate cuts, secondary market indicators and ETF inflows as some of the key drivers in creating this perfect storm.
AMP chief economist Shane Oliver agrees that bitcoin’s breakout from its recent downtrend could pave the way for the cryptocurrency to surge to new record highs before 2025.
“I suspect there will probably be some limitations on it, but by the way [bitcoin’s] going, it looks like it probably will reach a high by the end of the year,” Oliver told InvestorDaily, emphasising that the ongoing confirmation of monetary policy easing will play a big part in this momentum.
“So I think the broader backdrop is just the ongoing shift towards lower interest rates, but bitcoin has probably also received some boosts from increasing prospects of a Trump victory.”
Namely, with barely a week remaining until election day, former president Donald Trump has edged ahead of Vice President Kamala Harris in a recent tracking poll of the 2024 presidential election, according to RealClearPolitics.
“Trump is said to be more favourable towards crypto and bitcoin than the Harris administration would be,” Oliver said, adding that bitcoin, at its most fundamental, aligns better with right-leaning politics.
“It’s seen as independent of government, so it sort of dovetails, to some degree, with right-wing politics.”
“In theory, a Republican administration would arguably be more supportive of it than a Democrat administration,” the economist said, also suggesting that bitcoin could be capable of reaching new highs before the election is even over.
Marc Jocum, investment strategist at Global X, echoed Lee in pointing out that billions of dollars flowing into bitcoin ETFs since the start of the year, coupled with increased institutional interest, would certainly not be hurting the crypto asset either.
“Bitcoin has had a strong 2024 due to numerous factors,” Jocum told InvestorDaily.
Moreover, the investment strategist agreed with Oliver in that the US election has left some “animal spirits” in the market, which, alongside a Fed cut-rating cycle, could bode well for risk-on assets.
“Historically, bitcoin has thrived in low-interest environments, where dollar depreciation often boosts demand as an alternative asset,” he said.
While the options market is also betting on bitcoin hitting record highs over the next couple of months, Jocum underscored the multitude of factors that could tip the scale against this outcome, including geopolitical tensions, fiscal stability, and potential rate cut surprises.
“While the upside may look promising for bitcoin to take out its record highs, investors need to be able to stomach the potential for rising volatility and large drawdowns.
“Volatility is the price of admission investors pay for the potential of higher returns than leaving their money in cash and having a broad portfolio of asset classes to complement cryptocurrencies like equities, bonds and gold may help smooth returns and reduce overall volatility,” Jocum said.
