The Rise of Bitcoin: What’s Driving the Recent Surge?

Key Takeaways

• Bitcoin is back above $63,000, a more than 15% increase from last week’s low.
• Increased odds of an election victory for former President Donald Trump likely fueled some price momentum.
• Meanwhile, BlackRock’s Larry Fink endorsed bitcoin as a “legitimate financial instrument.”

Bitcoin (BTC) was back above $63,000 for the first time in two weeks on Monday, up more than 15% from the lows of last week.

Bitcoin Momentum Seen Helped by Election Outlook

Some of that price momentum is likely associated with the viewpoint that the re-election of former President Donald Trump, who has lately become viewed as a stronger supporter of cryptocurrency, is more likely. Trump has indicated he will attend a bitcoin conference in Nashville later this month, according to conference organizers.

“Bitcoin’s price is positively correlated with the probability of a Trump Presidency and will remain sensitive to election updates,” said analysts from brokerage firm Bernstein in a report, according to The Block. The report also offered upbeat scenarios for bitcoin-mining stocks, including their diversification into artificial intelligence.

Crypto-related stocks also saw gains in trading Monday. MicroStrategy (MSTR), one of the largest corporate bitcoin investors, saw its shares rise more than 16% while Coinbase (COIN) and miner Marathon Digital (MARA) shares jumped 11% and 18%, respectively.

BlackRock’s Fink Gets Behind Bitcoin

Bitcoin has found another supporter in BlackRock (BLK) CEO Larry Fink, who went from being a self-proclaimed “proud skeptic” to a “major believer.”

“I’m not trying to say there’s not misuses, like everything else, but it is a legitimate financial instrument that allows you to have non-correlated type of returns,” Fink told CNBC in an interview Monday, adding that he is “a major believer that there’s a role for bitcoin in portfolios.”

BlackRock’s spot bitcoin exchange traded fund—iShares Bitcoin Trust (IBIT)—has been one of the category’s most-successful products. The fund secured almost $4 billion in net inflows in the second quarter, and roughly $18 billion since it began trading.

German Selling Abates, ETF Inflows Remain Strong

Cumulative spot bitcoin ETF net inflows hit of $15.8 billion on Friday. The products gathered about $1.4 billion in the entire week, effectively canceling out pressure from German authorities selling cryptocurrency it had seized.

A drag on the price of bitcoin has also been removed, as Germany’s on-chain bitcoin balance is now about zero. Based on data from Arkham Intelligence, Germany sold 42,000 bitcoin, worth around $2.4 billion, in one week.

The recent surge in Bitcoin’s price can be attributed to a combination of factors including positive sentiment around the potential re-election of Donald Trump, increased institutional support from companies like BlackRock, and strong inflows into Bitcoin ETFs despite selling pressure from German authorities.

As Bitcoin continues to gain mainstream acceptance and support from influential figures in the financial industry, its price momentum is expected to remain strong in the coming weeks. Investors and traders are closely watching developments in the cryptocurrency market to capitalize on potential opportunities for profit.

Overall, the future looks bright for Bitcoin as it solidifies its position as a legitimate financial instrument and continues to attract interest from both retail and institutional investors.

Read the original article on Investopedia.