Bitcoin ($BTC) attained a new all-time high this week again, climbing above $76,600 on Thursday. This record-breaking price was driven by recent changes in economic policy and politics.
It majorly includes a Federal Reserve interest rate cut and Donald Trump’s victory in the US presidential election.
The combination of these events has brought increased enthusiasm to the cryptocurrency market, with analysts predicting further potential for Bitcoin.
The US Federal Reserve recently reduced interest rates by 35 basis points, a move that has had a direct impact on the price of Bitcoin.
By lowering interest rates, the Fed made borrowing money cheaper, which encourages investors to seek out higher-yielding assets like Bitcoin.
Lower borrowing costs mean there is more available cash or “cheap capital” that often flows toward investments that have the potential for higher returns.
Many investors see Bitcoin as a reliable hedge against inflation and a potential alternative to traditional currency, especially when economic conditions are uncertain.
Some analysts suggest that the Fed’s interest rate cuts might weaken the dollar, prompting investors to diversify their portfolios with Bitcoin and similar assets.
“This rate cut is a signal that the Fed is supporting the market, and it has encouraged investors to look for profitable investment opportunities”, explained one analyst.
By increasing market liquidity, the Fed has set the stage for a stronger demand for Bitcoin.
Trump’s re-election sparks optimism in the market
Another factor that has been driving Bitcoin’s recent surge is Donald Trump’s re-election as US president.
Political shifts often have a significant effect on financial markets, and Trump’s win is no exception.
His administration is expected to promote economic growth, push for business-friendly policies, and reduce regulation—conditions that tend to benefit both traditional markets and cryptocurrencies.
Trump’s re-election has fueled investor optimism, with many seeing Bitcoin as a strategic choice during this period of political change.
“The political change has strengthened confidence in sustained economic growth, encouraging investors to consider Bitcoin as a way to protect their capital”, said a market analyst.
Trump’s policies, which may include new incentives for US businesses, have bolstered the positive outlook for Bitcoin, making it even more attractive as a safe investment option.
With expectations of continued economic expansion and pro-business policies, many investors have been quick to embrace Bitcoin as a protective measure for their wealth.
No immediate signs of market overheating
Despite Bitcoin’s rapid price growth, market analysts don’t believe the cryptocurrency is currently overvalued.
The head of research at Galaxy, Alex Thorn, noted in a report on 7 November, “The market does not look overheated from a fundamental perspective”.
His view is supported by the strong trading volume that accompanied Bitcoin’s new high, which suggests that the price increase is being supported by solid demand.
Other analysts agree with Thorn’s perspective. Nansen analyst, Aurelie Barthere, observed that Bitcoin’s record high price was reached alongside high trading volume, signalling continued positive momentum.
“Traders are re-risking, which is reflected in the recent upward movement in crypto”, Barthere explained, indicating that investor confidence remains strong after the election.
Additionally, crypto analyst Ali Martinez predicts Bitcoin will continue its upward trend, estimating that it could reach $78,000 before dipping to $71,500 and eventually rebounding to $85,000.
However, some analysts are cautious, pointing out that Bitcoin’s price may face short-term resistance.
Ki Young Ju from CryptoQuant suggested that while a further increase of 30-40% could happen, it’s unlikely that Bitcoin will replicate the massive price gains seen in previous cycles, where growth reached up to 368%.
He advises investors to consider taking profits during the market’s high points, explaining that Bitcoin’s price moves in cycles. “Bitcoin follows a cyclical nature, and understanding these cycles can help investors navigate periods of high and low prices”, Ju said.
Bitcoin’s rise has also had an effect on other cryptocurrencies, with many altcoins gaining value as well.
Solana ($SOL), in particular, has shown strong performance, recently breaking past $200 for the first time in seven months.
At the time of writing, $SOL was trading around $203, marking a weekly gain of 21% and achieving a market cap of approximately $94 billion.
