Bitcoin Breaks Through $65,000 As Global Macro Factors Fuel Gains

Bitcoin prices rallied today, rising to their highest since July as a combination of global macroeconomic developments fueled gains in risk-on assets.

The world’s most valuable digital currency by total market capitalization approached $66,000 this afternoon, according to Coinbase data provided by TradingView. After experiencing these gains, the cryptocurrency was trading at its loftiest value since late July.

Major U.S. stock indices also increased, with the S&P 500 setting a fresh, all-time high, Google Finance data indicates. The Dow Jones Industrial Average and the Nasdaq Composite rose during the day.

“With the S&P 500 putting in its ATH, and the still-strong correlation between it and BTC, it’s not a surprise that BTC finally broke through $65k again,” Tim Enneking, managing partner of Psalion, stated via emailed comments.

Bullish Macro Developments

When explaining what drove this latest appreciation, analysts cited several factors, ranging from the effects of last week’s Federal Reserve rate cut to the Chinese government’s recent stimulus announcement.

John Haar, managing director at Swan Bitcoin, spoke to these developments.

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“Bitcoin’s price appears to be responding to large macro trends, such as continued US fiscal deficits, the Fed’s interest rate cuts and easier monetary policy, and China’s announcement this week of fiscal and monetary stimulus, all of which benefit global liquidity and risk assets, including Bitcoin,” he said through email.

Mike Marshall, senior researcher at Amberdata, also weighed in.

“Bitcoin’s surge past $65,000 is driven by a combination of macroeconomic shifts and institutional interest,” he asserted in an emailed message.

“The Federal Reserve’s recent 50 bps rate cut, lowering the federal funds rate to a range of 4.75% to 5%, sparked optimism in speculative markets like Bitcoin,” said Marshall.

“Additionally, the SEC’s approval of options for BlackRock’s iShares Bitcoin Trust opens new institutional avenues, potentially triggering a gamma squeeze that could amplify price increases as demand for options grows,” he stated, referring to the government regulator’s recent decision to authorize these new equity-based financial instruments.

Market History

While several experts who provided input for this article focused on macroeconomic developments, one analyst added another perspective, highlighting the performance bitcoin has traditionally generated during the months of September and October.

“Bitcoin’s recent climb to $65,000 is consistent with its historical performance patterns, particularly when comparing September and October,” said Eliézer Ndinga, VP, head of strategy and research at 21Shares.

“Historically, September has been one of the weakest months for Bitcoin, with average monthly returns of around -6%, reflecting a period of market consolidation and lower trading volumes,” he noted.

“In contrast, October has traditionally delivered much stronger performance, averaging gains of approximately 10-15% over the past decade,” Ndinga specified.

“This seasonal trend, often referred to as the ‘October effect,’ is driven by increased market activity and improved sentiment heading into the final quarter of the year.”

Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether, EOS and SOL.