Bitcoin Nears All-Time High: The New Gold?

Bitcoin broke above $70,000, briefly touching $71,000 with a 24-hour gain of more than 4%. This rally also lifted Ethereum climbing back above $2,600.

Some investors might notice that Bitcoin's recent rise happened alongside gold's increase. In March, both reached their peak at nearly the same time. Since November 2022, Bitcoin and gold have often moved in the same direction, showing a growing connection between them.

One major catalyst is the upcoming U.S. presidential election. Republican candidate Donald Trump has pledged to include Bitcoin in the national strategic reserves and transform the U.S. into the "global hub of cryptocurrency" if re-elected. Vice President Kamala Harris has also expressed support for the growth of cryptocurrencies, further fueling optimism in the market. Data shows that over the past 24 hours, nearly 60,000 traders were liquidated, with a total loss of $257 million - $103 million of which came from short positions—indicating strong bullish sentiment.

Another major catalyst for Bitcoin's rise is the expectation of rate cuts from the Federal Reserve. Markets widely anticipate a 25-basis-point cut during the Fed's meeting on November 6-7, with CME data showing a 98.4% probability of a rate reduction. Lower interest rates increase liquidity in the financial system, encouraging investors to move funds into riskier assets like Bitcoin. Bitcoin and other speculative assets may see further gains if the Fed continues to cut rates.

Institutional investors are ramping up their Bitcoin allocations, adding to the rising demand. Data shows that U.S. Bitcoin spot ETFs have consistently attracted inflows throughout October, with cumulative net inflows reaching $21.93 billion by October 30. Microsoft recently submitted documents to the SEC, exploring the possibility of incorporating Bitcoin into its strategic reserves, although its board has expressed opposition. Meanwhile, BlackRock increased its Bitcoin holdings by 30,000 coins over the past two weeks, bringing its total holdings to more than 400,000 - demonstrating growing institutional participation.

On the technical front, Bitcoin has formed a "golden cross," where the 50-day moving average crosses above the 200-day moving average. Historically, this pattern signals the beginning of a bull market, with investors often seeing triple-digit returns within a year of the crossover. Currently trading near $73,000, Bitcoin's technical indicators suggest there is room for further upside.

In the long term, Bitcoin is increasingly seen as "digital gold," a key tool for inflation hedging. Demand for Bitcoin as a hedge has been growing as the Fed continues its anti-inflation measures. Bitcoin's role in financial applications is expanding, including its use in lending and fundraising. With the launch of spot and futures ETFs, more asset managers are incorporating Bitcoin into their portfolios, further boosting institutional demand.

The influx of capital into Bitcoin markets reflects growing investor confidence. During the final week of October alone, Bitcoin ETFs saw $920 million in inflows—triple the amount seen during the same period in 2021. Despite regulatory scrutiny surrounding Tether, overall market sentiment in the crypto space remains robust.

Options markets show traders are highly optimistic about Bitcoin's future trajectory. Many call options expiring on November 29 bet on Bitcoin, reaching $80,000. Several institutions have forecast that Bitcoin could exceed $200,000 by the end of 2025. Historical data indicates that Bitcoin typically gains 26%, 36%, and 11% in October, November, and December, respectively, suggesting the possibility of hitting $100,000 before the end of this year.

In summary, macroeconomic policies, institutional demand, and positive market sentiment drive the current Bitcoin rally. Although the market may experience volatility as prices approach all-time highs, the long-term outlook remains positive. If the current momentum continues, Bitcoin is well-positioned to set new record highs in the coming months.