Bitcoin’s recent rally continues to gain momentum, with the world’s largest cryptocurrency approaching an all-time high today, surpassing $72,000.
Analysts point to three main factors that triggered this volatility and believe that there will be more volatility in the future.
Election Sentiment and the Trump Factor
Carlos Guzman, an analyst at crypto market-making firm GSR, said investor sentiment around the upcoming US elections is a key factor. According to Guzman, Donald Trump’s potential win is pushing Bitcoin prices higher in the short term due to his pro-crypto stance. Trump signaled his support for cryptocurrencies in May, saying at his Mar-a-Lago residence, “If you’re for crypto, you better vote for Trump.” His campaign has also accepted crypto donations.
Vice President Kamala Harris, by contrast, has been more reserved in her stance on digital assets. In September, she spoke generally about boosting America’s competitiveness through innovative technologies like artificial intelligence and digital assets, but details on crypto were lacking.
Middle East Geopolitical Developments
Geopolitical tensions in the Middle East are also weighing on Bitcoin’s trajectory. Guzman pointed to a de-escalation of tensions following Israel’s recent limited military intervention against Iran. Investors initially pulled back from risky assets, including cryptocurrencies, fearing a wider conflict. But Iran’s statement last week expressing its intention to avoid escalating tensions and Israel’s confirmation of limited retaliation helped ease market concerns.
“This has to be the end of tit-for-tat,” Pentagon deputy press secretary Sabrina Singh told reporters during a briefing on Monday.
ETF Inflows Are Increasing
The third driver behind Bitcoin’s recent rally is the increased investment inflow into spot Bitcoin ETFs. Guzman noted that these ETFs saw their highest net inflows in the past two weeks, indicating a renewed bullish sentiment among institutional investors. Bitwise CIO Matt Hougan confirmed this trend, noting that Bitcoin ETFs saw $3 billion inflows in the past two weeks alone.
“The end of the year is going to be crazy,” Hougan said on X (formerly Twitter).
With election sentiment, easing geopolitical tensions, and strong ETF inflows all playing a major role, analysts are expecting more volatility in the Bitcoin price as it approaches a potential new record.
As the U.S. elections approach and geopolitical tensions remain volatile, Bitcoin’s rally could see additional momentum driven by both market sentiment and increased institutional participation through ETFs, according to Guzman.
*This is not investment advice.