According to Bernstein in a note Monday, several factors are driving this surge, from macroeconomic changes to shifts in market sentiment.
Here are the five key reasons behind Bitcoin’s latest rally, as outlined by Bernstein:
Rate Cuts and Inflation Hedging
The recent 50 basis point rate cut by central banks has impacted markets, with Bitcoin benefiting from a weaker dollar and loose monetary policy, according to Bernstein.
The firm notes that Bitcoin, like gold, is seen as a non-sovereign asset, which gains appeal in times of fiscal excess, especially with U.S. debt levels reaching $35 trillion. Year-to-date, Bitcoin is up 45%, compared to gold’s 27% rise.
Growing Bipartisan Support for Crypto
Furthermore, Bernstein says crypto is gaining political traction, with bipartisan backing adding momentum.
Vice President Harris recently signaled support for digital assets during a New York City event, marking the administration’s first explicit crypto endorsement.
According to Bernstein, while a Trump victory could further accelerate pro-crypto policies, institutional interest in major assets like Bitcoin is expected to remain strong regardless of the election outcome.
Bitcoin ETF Momentum
Institutional flows into Bitcoin ETFs have remained robust. “[In the] last 10 days, Bitcoin ETF clocked $800Mn inflows, despite choppy price action,” wrote Bernstein.
The firm expects more wirehouses, such as Morgan Stanley, to launch Bitcoin ETFs, which will likely drive further inflows as advisors solicit clients.
Miner Stability Post-Halving
Bitcoin miners are said to have adjusted to the April 2024 halving event, stabilizing their operations.
According to Bernstein, network hashpower has rebounded, signaling miner resilience and further solidifying Bitcoin’s foundation.
Reduced Selling Pressure
Major Bitcoin sales by the U.S. and German governments, as well as distributions from Mt. Gox, have been absorbed by the market, says the firm.
Additionally, they note MicroStrategy raised $2.1 billion to buy more Bitcoin, pushing its holdings to 252,220 BTC, or 1.3% of total supply.
Source: Cryptocurrency - investing.com
