Bitcoin has many reasons to rally – do analysts think BTC will go?

With Bitcoin surging past the $64,000 level last week and posting a 10% gain over the past week, analysts have pointed to various catalysts accelerating the advance.

From last week's Fed interest rate cut and increased interest in Bitcoin ETFs to bipartisan political support. While the reasons vary, analysts seem to agree that the coming months will set the stage for a rally and further gains in value.

Bitcoin (BTC) is trading at $63,520, up 1.2% in early European trading hours and up nearly 10% over the past week. Ethereum (ETH) is trading at $2,650, up 2.4% over the past seven days, up about 15%, according to CoinGecko data.

One of the main drivers behind Bitcoin's rally was the Federal Reserve's recent decision to cut interest rates by 50 basis points, which weakened the US dollar and made BTC a hedge against inflation and fiscal instability. With the US fiscal debt hitting $35 trillion and increasing by $1 trillion every 100 days, Bitcoin is being viewed as a store of value similar to gold.

Bernstein analyst Gautam Chugani said: “Any sign of looser monetary policy and a stronger dollar is positive for Bitcoin.

Political developments also intensified sentiment. At a fundraiser in New York over the weekend, US Vice President Kamala Harris expressed her support for digital assets, making her first public statement about the crypto industry.

This follows former President Donald Trump's pro-crypto stance in favor of friendly regulations. While the crypto community remains wary of Harris' stance, analysts believe Bernstein's acknowledgment indicates bipartisan support alongside Trump's support, leading to greater regulatory transparency.

The momentum of Bitcoin ETFs also continues to be an important factor. Despite the recent price volatility, Bitcoin ETF flows remain entirely positive, with total inflows reaching $17 billion. “With new approvals at wirehouses (recently Morgan Stanley went live) and a limited gestation period for advisors to solicit clients, we expect revenue streams to accelerate again,” Bernstein reported.

The post-halving stability of BTC miners contributed to the positive sentiment.

Bitcoin halving events, which reduce the block reward of miners, often lead to instability in the mining sector. However, a full quarter after the April 2024 halving, the network's hash rate has returned to pre-halving levels, indicating that the market has absorbed the impact.

Additionally, the major Bitcoin selloffs appear to be over, providing a clear runway for further price appreciation. Neither the German government nor the Mt. Gox trustees, who had a large stockpile of bitcoins, completed the sale, with the market buying more than $11 billion worth of bitcoins without any price disruption.

Meanwhile, key institutional player MicroStrategy raised $2.1 billion to buy more Bitcoin, increasing its holdings to 252,220 BTC, or about 1.3% of the total Bitcoin supply. Echoing Bernstein's optimism, crypto analyst firm 10x Research emphasized the cyclical nature of Bitcoin and the importance of upcoming current patterns that have historically driven the market higher.

“Bitcoin's previous bull markets peaked between October and March, and we expect a major crash in Q4 2024,” said Marcus Thielen, head of research at 10x Research. Key levels such as the previous cycle high of $68,330 will be crucial in determining whether BTC has reached a new high.

In addition to these cyclical factors, the US presidential election in November and an expected $16 billion disbursement of funds from FTX lenders between December 2024 and March 2025.

“We expect $5-8 billion to flow back into the crypto space, which could fuel further Bitcoin growth,” the 10x analyst said.

MicroStrategy's aggressive Bitcoin purchases indicate strong demand, and as more companies follow its lead, this could extend Bitcoin's upward momentum. The overall market may benefit from its adoption by traditional financial (TradeFi) investors, who see Bitcoin as a valuable hedge in uncertain times.

Edited by Stacy Elliott.