Bitcoin Surges Towards $70,000 Amidst Market Frenzy, but Underlying Factors Remain

Bitcoin Surges Towards $70,000 Amidst Market Frenzy, but Underlying Factors Remain Bitcoin is on the verge of breaking its all-time high. On October 30th, it firmly established itself above the $70,000 mark, briefly touching $73,000 and nearing its peak

Bitcoin Surges Towards $70,000 Amidst Market Frenzy, but Underlying Factors Remain

Bitcoin is on the verge of breaking its all-time high. On October 30th, it firmly established itself above the $70,000 mark, briefly touching $73,000 and nearing its peak. Coinglass, a cryptocurrency data platform, reported Bitcoin's price at $72,300 per coin as of noon on October 30th, reflecting a 1.91% increase over the past 24 hours. The trading volume within the same period reached $88.87 billion, an 8.32% surge, pushing its market capitalization to $1.43 trillion. Over the past 24 hours, market liquidations amounted to roughly $180 million, with short selling accounting for the majority.

While Bitcoin maintains its lively activity, major cryptocurrencies Ethereum and Binance Coin (BNB) exhibit comparatively muted performances. Ethereum saw a 17.22% decline in its trading volume over the past 24 hours, while BNB experienced a marginal 1.53% increase.

The prevailing Bitcoin fervor is closely tied to the looming US election. Donald Trump's public endorsement of cryptocurrency's future development positions it as a "Trump trade" in market perception. Henrik Andersson, Chief Investment Officer of Apollo Capital, underscores the pivotal role of Trump's election outcome in shaping the cryptocurrency market's trajectory. A Trump victory, he posits, would likely fuel a surge in risky assets, potentially propelling Bitcoin to reach $100,000 by year's end.

Beyond political factors, tech giants' actions have also contributed to the Bitcoin market's fervor. Microsoft recently hinted at the possibility of investing in Bitcoin. A recent SEC filing revealed Microsoft's intention to vote on a proposal to "evaluate an investment in Bitcoin" during its annual meeting in December.

In the Asian market, Hong Kong Exchanges and Clearing Limited (HKEX) announced the launch of its Hong Kong Stock Exchange Virtual Asset Index Series on November 15th. This initiative aims to furnish a reliable benchmark price for virtual assets, bolstering Hong Kong's position as a leading digital asset hub in Asia.

Since October, Bitcoin has made multiple attempts to breach the $70,000 threshold, surpassing $67,000 on October 15th and reaching $69,000 on October 21st, followed by multiple retractions. This marks Bitcoin's return to the $70,000 range after a four-month absence, a level viewed as significant by the cryptocurrency market.

Zhao Wei, Senior Researcher at OKX Research Institute, attributes Bitcoin's recent upswing to several key factors. First, the Federal Reserve's substantial interest rate cuts have increased market liquidity, boosting investor appetite for inflation-hedging assets like Bitcoin. Second, Bitcoin's strong correlation with the S&P 500 has allowed it to ride the stock market's upward trend.

It's noteworthy that the spot market's performance has ignited the fundraising capacity of related ETF products. Coinglass data reveals a net inflow of $827 million across 11 Bitcoin ETFs on October 29th, marking the highest single-day net inflow in four months. Among these, iShares Bitcoin ETF (IBIT), managed by BlackRock, recorded the most significant inflow at $600 million, closely followed by Fidelity's FBTC at $134 million. Since October, the Bitcoin spot ETF market has generally exhibited an optimistic sentiment, with only October 22nd experiencing a net outflow of $79.1 million.

Zhao Wei contends that the rapid expansion of the cryptocurrency and associated ETF markets could prompt a gradual shift in the US regulatory landscape. The growth of the cryptocurrency market and its potential impact on traditional financial systems may incentivize the US government to establish a more comprehensive and flexible regulatory framework, introducing concrete compliance and risk management measures to enhance market transparency and regulatory adherence.

Larry Fink, CEO of BlackRock, recently remarked during the company's third-quarter earnings call that Bitcoin is "a new asset class," serving as an alternative to gold and other commodities.

Regarding the notion that Bitcoin's investment potential rivals gold, Zhao Wei suggests that while they share certain resemblances, notably serving as tools to counter inflation, their investment potential diverges significantly. As a millennia-old store of value, gold exhibits lower volatility, making it better suited for long-term, stable investment strategies. Conversely, Bitcoin's greater volatility attracts investors with a higher risk tolerance.

"Despite Bitcoin's unique appeal in terms of investment potential, it cannot fully replace gold's stability. Investors need to make rational choices based on their investment preferences and risk tolerance," he concluded.

In essence, Bitcoin's renewed push toward $70,000 is driven by a confluence of factors, including the Federal Reserve's monetary policy, political events, tech giants' actions, and market capital inflows. However, investors are urged to exercise prudence when navigating the Bitcoin market, acknowledging its inherent risks, and aligning their investment decisions with their individual circumstances.