Bitcoin’s (BTC) price is once again in the spotlight as it nears a gold-like all-time high (ATH) with a surge to $59,800. As gold prices recently reached $2,509.41 per ounce, comparisons between the two assets are being made. Several factors are pushing BTC higher, indicating that a new ATH could be near. Here are five reasons why BTC is heading toward this key milestone.
1. Whales Purchase Bitcoin During Price Drop
A key reason behind Bitcoin’s price surge is the ongoing decrease in BTC held on exchanges. Long-term holders, often called “whales,” have been accumulating Bitcoin in large amounts. Over the past 30 days, exchanges have seen a drop of 11,317.53 BTC.
Major platforms like Coinbase Pro and Bitfinex have witnessed strategic withdrawals, with over 23,000 BTC being accumulated, according to Coinglass data. In the last seven days alone, exchange balances have dropped by 10,657.87 BTC. This large outflow indicates that traders are moving their BTC into cold storage, showing strong confidence in its long-term value. Additionally, long-term holders have been buying during the dip, with more than 500,000 BTC accumulated since July 30. This phase of accumulation by whales, who often set market trends, reflects a strong bullish outlook, driving BTC’s price closer to its ATH.
2. Strong Inflows into Bitcoin ETFs
Another major factor driving the recent rise in Bitcoin’s price is the strong inflows into Bitcoin exchange-traded funds (ETFs). On August 16 alone, spot Bitcoin ETFs saw an inflow of $35.9 million, continuing a week of positive inflows totaling $32.4 million.
Significant investments came from BlackRock, Fidelity, Bitwise, and Ark, contributing $20.4 million, $61.3 million, $12 million, and $13.4 million, respectively. However, Grayscale’s GBTC experienced large outflows of $72.9 million on Friday. Despite this, the strong performance of other ETFs is viewed as a bullish indicator. These ETF inflows highlight increasing investor confidence in Bitcoin as an asset class, with more investors seeking exposure through regulated financial products. The added liquidity and buying pressure from these inflows help support Bitcoin’s upward price trend.
3. Increasing Institutional Interest in Bitcoin ETFs
Institutional adoption of Bitcoin ETFs has picked up pace, as shown by recent filings and disclosures. For example, Goldman Sachs revealed in a 13F filing that it held significant positions in various Bitcoin ETFs as of June 30, including $238.6 million in iShares Bitcoin Trust, $79.5 million in Fidelity Bitcoin ETF, and other key holdings. Similarly, Morgan Stanley disclosed large investments in U.S. spot Bitcoin ETFs. The banking giant holds 5,500,626 shares of BlackRock iShares Bitcoin Trust, valued at $187.79 million. Even pension funds are now considering these investments.
SEE ALSO: Why Is Bitcoin’s Price Dropping Today?
The participation of major financial institutions like Goldman Sachs and Morgan Stanley in Bitcoin ETFs reflects strong confidence in the crypto’s potential. Additionally, Framework Ventures co-founder Vance Spencer is optimistic about BTC ETFs and expects a surge in institutional investment.
4. Impact of Upcoming Elections on Bitcoin Price
As the US election cycle nears, political factors are increasingly affecting market sentiment. Historically, elections have been significant for financial markets, often causing increased volatility and prompting strategic moves by investors. Presidential candidates like Donald Trump and Robert F. Kennedy Jr. have voiced support for cryptocurrencies. On the other hand, Kamala Harris has proposed a crypto reset to shift away from the negative stance previously adopted by Democratic leaders and the Biden administration.
Analysts like Doctor Profit suggest that Bitcoin might enter a price discovery phase after the election, potentially reaching a new all-time high. Although the exact timing is uncertain, the election anticipation contributes to the positive sentiment pushing Bitcoin’s price higher, similar to gold. Doctor Profit also dismissed concerns about a potential drop to the $40,000 level.
5. Anticipated Federal Reserve Rate Cuts
Expectations of a Federal Reserve rate cut are significantly supporting Bitcoin’s price. With inflation cooling and dovish remarks from Fed officials, many market participants are betting on a rate cut at the next FOMC meeting.
The CME FedWatch Tool shows a 75% chance of a 25 basis point cut, while 25% of participants anticipate a 50 basis point cut. A rate cut would likely weaken the US dollar and benefit assets seen as inflation hedges, such as Bitcoin. This potential for looser monetary policy is another factor driving Bitcoin’s rise toward its all-time high, similar to gold.
SEE ALSO: Donald Trump Appoints Bitcoin Supporter Howard Lutnick to Lead Transition Team
