Bitcoin Soars to Highest Level Since Spring What’s Driving the Surge?

Bitcoin has surged approximately 3%, reaching a peak of $71,887 on Tuesday morning, marking its highest price since late May. This increase brings Bitcoin’s gains in October to 11%, significantly outpacing the S&P 500’s modest 1% rise this month.

Alongside Bitcoin, other major cryptocurrencies also experienced notable gains. Ethereum climbed 4% to a 10-day high of $2,637, Binance Coin rose 2% to $608, and Solana reached a three-month high of $182, up 2%. Shares of Bitcoin mining companies, including Core Scientific, Marathon Digital, and Riot Platforms, each rose by at least 15% in October, reflecting growing investor interest.

1. Hedge Against Inflation

Prominent investors, including hedge fund billionaire Paul Tudor Jones, are increasingly viewing Bitcoin as a hedge against inflation. With major political figures like Kamala Harris and Donald Trump advocating for policies that could potentially add trillions to the national debt, many investors are seeking refuge in cryptocurrencies.

2. Federal Reserve Policy Shifts

The Federal Reserve’s recent interest rate cut has led to skepticism about its effectiveness in combating inflation, prompting investors to look towards alternative assets like Bitcoin. Traditional safe havens, such as gold, have also seen a price increase of 6% since the Fed’s September decision.

3. Political Dynamics

As betting markets shift in favor of a Trump victory, the former skeptic is now positioning himself as a pro-Bitcoin candidate, advocating for a “strategic national Bitcoin stockpile.” This pivot has sparked renewed interest in Bitcoin as a potential investment.

4. Institutional Inflows from ETFs

The approval of spot Bitcoin exchange-traded funds (ETFs) earlier this year has created significant upward pressure on prices. These ETFs, managed by firms like BlackRock, Fidelity, and Grayscale, currently hold approximately $66 billion in Bitcoin accounting for about 5% of the global market.

Bitcoin remains the most valuable cryptocurrency, with a market capitalization that is more than four times larger than that of Ethereum. After hitting an all-time high of $73,750 in March, Bitcoin has rebounded over 300% from its late 2022 lows during the crypto winter, which was marked by several high-profile bankruptcies.

As Bitcoin continues to gain momentum, market participants are closely monitoring these developments, with the potential for further growth as the U.S. presidential election approaches and economic conditions evolve.Stay tuned for updates as the situation develops.