The current sharp rise in Bitcoin (BTC), as well as other mainstream cryptocurrencies, can be analysed in terms of multiple factors, both internal and external to the market. Among them, market sentiment, macroeconomic environment, policy developments, and external events such as the U.S. election have had a profound impact on the rise of cryptocurrencies.
High Market Sentiment and Increased Institutional Holdings
On 14 October, Bitcoin surpassed the $66,000 mark, and despite the subsequent pullback, it gained 6.08% within the day, showing a strong upward trend in the market. Not only that, but other mainstream coins like ethereum (ETH) also performed similarly, with ethereum up 6.8% intraday, further cementing the positive sentiment in the market. This upward trend is not only reflected in the active participation of retail investors, but is also supported by institutional investors. For example, Japanese-listed Metaplanet recently increased its holdings by 106.976 bitcoins, purchasing them at a price of approximately $62,631 per coin, bringing its cumulative holdings to a total of 855.478 bitcoins. The increase in institutional holdings not only shows recognition of bitcoin’s long-term value, but also conveys the market’s optimism about future upside expectations.
Industry Events Drive the Market
Major events within the crypto industry have likewise had a direct driving effect on the market. CoinSec’s founder, Changpeng Zhao (CZ), after a brief absence from the public eye due to legal issues, returned to attend the CoinSec Blockchain Week, the most important Web3 event of the year. This marks not only the personal return of Zhao Changpeng, but also the potential future consolidation of CoinSafe’s market position. Such industry events have deepened the market’s focus and investment interest, fuelling the overall recent rise in cryptocurrencies.
In addition, World Liberty Financial (WLFI), a decentralised financial project in which the Trump family is involved, is set to launch a public sale on 15 October with a target of raising $300 million. The project has attracted widespread public attention due to the Trump family’s celebrity status. Whether it’s the political overtones of the project itself or the new liquidity it brings to the cryptocurrency market, the launch of WLFI will help to boost market heat and further stimulate crypto market prices.
Potential impact of the US election
The US presidential election of 2024 has potentially significant implications for the cryptocurrency market. Although US Vice President Kamala Harris did not delve into the details of cryptocurrency regulation in her campaign speeches, her election agenda includes a degree of digital asset policy. This means that the cryptocurrency market is taking a wait-and-see approach to the upcoming policy changes. The Republican and Democratic candidates may have very different approaches to cryptocurrencies, with the market generally believing that the Republicans are likely to adopt a more relaxed policy stance that promotes innovation and free markets, while the Democrats favour greater regulation.
The policy uncertainty brought about by this election has increased volatility in the crypto market, but it has also created short-term speculative opportunities for the market, with investors moving in to bet on the introduction of policies that could benefit cryptocurrencies. Specifically, the policy stances of the candidates will play an increasingly important role in market sentiment as the election campaign progresses. Anticipation of cryptocurrency-friendly policies, such as support for blockchain technology or tax incentives for cryptocurrency investors, could further drive cryptocurrency prices higher.
Global macroeconomic environment and demand for safe-haven assets
In addition to intra-industry events, global macroeconomic uncertainty has indirectly fuelled the crypto market. With rising global geopolitical tensions and inflationary pressures, many investors have begun to view cryptocurrencies such as Bitcoin as digital gold, a hedge asset against inflation. Especially against the backdrop of high volatility in traditional financial markets and a pullback in the stock market, assets such as Bitcoin have become a new choice for capital hedging.
Greyscale Investments and Crypto Asset Diversification
Grayscale Investments recently published a list of crypto assets it is considering including, covering 35 cryptocurrencies. This diversified layout shows the expansion of the crypto ecosystem and signals that in the future, investors can indirectly hold crypto assets through more financial products. This not only enhances the diversity of investment channels, but also increases the liquidity and broad participation in the crypto market
In Summary
Bitcoin’s sharp rise is not an isolated event, but is driven by a combination of factors both inside and outside the market. The ramping up of institutional investment, major events within the cryptocurrency industry, policy uncertainty brought about by the U.S. election, and changes in the global macroeconomic environment have all provided strong support for the recent uptrend. Against this backdrop, the price performance of Bitcoin and other cryptocurrencies going forward could still be profoundly affected by further policies, market dynamics, and changes in the global economy.
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