Are Trump’s election win and the promise of lax crypto regulations the only reasons?
The world’s most famous cryptocurrency, Bitcoin, has experienced a dramatic price surge in recent times. Bitcoin’s rose from a low of US$88,700 earlier this month alone. Currently trading at US$91,599, Bitcoin has gained 1.21% in the last 24 hours and 3.60% over the past week.
Bitcoin surge demonstrates robust buying interest, reaffirming its dominance in the cryptocurrency market. On close inspection of political, regulatory, market, and technical factors that have all created a conducive climate, resulting in the current Bitcoin price surge.
Let’s explore all the above-mentioned key drivers of the Bitcoin surge in detail to understand its current and upcoming market movements.
US Political Events Boost Optimism
Recent political events in the United States have been very influential in Bitcoin’s rally. Crypto fans and investors are over the moon after Donald Trump won the US presidential election. Promising a more lenient regulatory environment for cryptocurrencies, Donald Trump has the ambition to nominate pro-blockchain innovation officials.
Trump’s plans to position the US as the global hub for cryptocurrency have started to give more fuel to investor confidence. Such messages of the new government policy have driven up demand for Bitcoin. Thus, forcing up valuations and driving Bitcoin surge substantially.
Regulatory Milestones Open Up Access
The regulatory landscape of Bitcoin has experienced a watershed shift. The United States Securities and Exchange Commission (SEC), on January 2024 approved the launching of spot Bitcoin ETF (exchange-traded funds). The ETFs were a game-changer, drawing approximately US$2 billion in capital inflows within weeks of the announcement of the US presidential election results. The instruments have so far managed to win the hearts of many investors through transparency and their ease of accessibility. This has resulted in the Bitcoin price surge.
The End of Crypto Winter
Bitcoin showed an exceptional recovery of reaching above US$90,000 from the very lows of US$69,700 that it registered towards the end of October. Indicating the end of the famous ‘crypto winter’, which referred to prolonged periods without price rises in the cryptocurrency market.
Overall, the capitalisation of the cryptocurrency market has increased to a cool US$3.1 trillion. Speculative trading and hopes for friendly policies have supercharged Bitcoin’s growth, which hints at renewed optimism on the part of old and new investors.
Rise in Retail as well as Institutional Participation
Retail investors now have easy access to Bitcoin investments through crypto exchanges and Bitcoin ETFs. This convenience has raised the number of investors in Bitcoin, eventually contributing to its higher demand.
Institutional demand for Bitcoin is growing at a fast pace as well. New investment instruments like ETFs have entered the portfolios of large organisations and fund managers, thus, propelling the acceptance of Bitcoin as a financial asset. This two-way participation between retail and institutional players points to the maturing nature of the Bitcoin market.
Scarcity: Driven by Technical Factors
The supply dynamics of Bitcoin remain the prime drivers of its price action. Bitcoin has a fixed supply model, with bitcoins being capped at 21 million. It also went through its latest Bitcoin halving event last April 2024 and has reduced block rewards for miners by 50%. This has heightened the rarity of newly minted bitcoins entering circulation.
The steady rise in demand against a tight supply created a natural scarcity for the cryptocurrency, resulting in a Bitcoin surge. This further cemented Bitcoin’s position as digital gold.
Conclusion
Sources behind Bitcoin’s surge lie in the support given by the political and regulatory improvements, broadening recovery of the general market, and scarcity of its supply. As bitcoin continues to evolve, investors await to see more growth amid the growing acceptance of crypto internationally.
