Highlights
- Bitcoin’s exchange balance drained as whales accumulated over 500,000 BTC.
- BTC registered strong ETF inflows and growing institutional adoption by Goldman Sachs and Morgan Stanley.
- A looming Fed rate cut and upcoming elections is also expected to boost Bitcoin price.
Bitcoin (BTC) price has seized the spotlight as analysts expect it to an all-time high soon. With the recent rise in gold price hitting an ATH of $2,509.41 per ounce, parallels between these two assets have been drawn. Several factors are driving BTC rally, suggesting that a new peak might be just around the corner. Here are five reasons why BTC is climbing toward this crucial milestone.
1. Whales Buy The Dip In Bitcoin Price
A significant factor fueling Bitcoin price surge is the continued drainage of BTC exchange balances. Also, BTC witnessed substantial accumulation by long-term holders, often referred to as “whales.” Over the last 30 days, exchanges have witnessed a reduction of 11,317.53 BTC.
It involved strategic withdrawals from major platforms like Coinbase Pro and Bitfinex, accounting for over 23,000 BTC accumulation, according to Coinglass data. Moreover, in the last seven days alone, the exchange balance has been reduced by 10,657.87 BTC. This massive outflow suggests that traders are moving their BTC holdings into cold storage, signaling a strong belief in its long-term value.
Furthermore, long-term holders have reportedly bought the dip with over 500,000 BTC accumulated since July 30. This accumulation phase by whales, who often influence market trends, indicates a robust bullish sentiment, further pushing BTC price toward its ATH.
2. Robust Bitcoin ETF Flows
Another key driver of the recent price momentum is the robust inflows into Bitcoin exchange-traded funds (ETFs). Per data from Farside Investors, spot Bitcoin ETFs saw a total inflow of $35.9 million on August 16 alone, continuing a week of positive flows amounting to $32.4 million.
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Notably, BlackRock, Fidelity, Bitwise, and Ark contributed to this inflow with significant investments, totaling $20.4 million, $61.3 million, $12 million, and $13.4 million, respectively. However, Grayscale’s GBTC recorded massive outflows of $72.9 million in Friday. Nonetheless, the resilient performance of other ETFs is seen as a bullish sign.
These ETF flows reflect growing investor confidence in BTC as an asset class, with more investors seeking exposure through regulated financial products. The inflows into these ETFs provide additional liquidity and buying pressure, which in turn supports the upward trajectory of Bitcoin price.
3. Growing Institutional Adoption Of Bitcoin ETFs
Institutional adoption of Bitcoin ETFs has gained significant traction, as evidenced by recent filings and disclosures. Goldman Sachs, for instance, revealed in a 13F filing that it held substantial positions in various Bitcoin ETFs as of June 30. These included $238.6 million in iShares Bitcoin Trust, $79.5 million in Fidelity Bitcoin ETF, and other notable holdings.
Similarly, Morgan Stanley disclosed massive investments in the U.S. spot Bitcoin ETFs. The banking behemoth holds 5,500,626 shares of BlackRock iShares Bitcoin Trust, valued at $187.79 million. Also, pension funds are now considering these investments.
The involvement of major financial institutions like Goldman Sachs and Morgan Stanley in Bitcoin ETFs signals a strong endorsement of the crypto’s potential. Additionally, Framework Ventures co-founder Vance Spencer is bullish on BTC ETFs and expects institutional investment to surge.
4. Upcoming Elections & Bitcoin Price
As the US election cycle approaches, market sentiment is increasingly influenced by the political sector. Historically, elections have been pivotal moments for financial markets, often leading to increased volatility and strategic positioning by investors.
Meanwhile, presidential candidates like Donald Trump and Robert F. Kennedy Jr have expressed a pro-crypto stance. Whilst, Kamala Harris initiated a crypto reset move to end the hostile approach considered by Democratic leaders and Biden administration.
Some analysts, like Doctor Profit, believe that BTC could enter a price discovery phase post-election, potentially setting a new ATH. While the timing remains uncertain, the anticipation surrounding the elections adds to the bullish sentiment driving Bitcoin price to new highs like gold. Moreover, the analyst ditched the notion of a possible drop to the $40,000 level.
5. Fed Rate Cut Expectations
Finally, expectations of a potential Federal Reserve rate cut are providing a significant tailwind for Bitcoin price. With cooling inflation figures and dovish comments from Fed officials, market participants are increasingly betting on a rate cut at the upcoming FOMC meeting.
According to the CME FedWatch Tool, there is a 75% probability of a 25 basis point cut. Whilst, 25% market participants expect a 50 bps cut. A rate cut would likely weaken the US dollar and boost assets perceived as hedges against inflation, such as BTC. The possibility of looser monetary policy is thus another factor contributing to Bitcoin’s climb toward its ATH like gold.
While this reasons highlighted underscores why BTC could jump to a new high, other unforeseen headwinds may arise. However, retail investors may also keep faith, capitalizing on the accumulations by firms like MicroStrategy to go long on the coin.
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