Bitcoin rose past $71,000 for the first time since June, supported by inflows into dedicated exchange-traded funds and speculation about potential outcomes from next week’s US presidential election that traders largely consider a bullish catalyst for the market.
The largest digital asset was trading at $70,962.85 at 8.50am UAE time on Tuesday.
Bitcoin is viewed as a Trump trade because Republican presidential nominee Donald Trump embraced digital assets during campaigning.
Traders have long perceived Mr Trump’s victory as a bullish catalyst for the industry due to his pro-crypto stance and pledge to make the US a Bitcoin powerhouse. Democratic candidate Vice President Kamala Harris has adopted a more measured approach, pledging to support a regulatory framework for the industry.
“The potential victory of Donald Trump in the 2024 elections is drawing particular attention in cryptocurrency markets,” said Antonio Di Giacomo, senior market analyst at forex trading platform XS.com.
“During his campaign, Trump promised a more favourable regulatory framework for the sector, which could lead to greater institutional and regulatory adoption of cryptocurrencies, including Bitcoin.”
However, traders are also concerned about the possible macroeconomic implications of his policies, he said.
“A government focused on boosting economic growth through stimulus could increase inflation levels, indirectly affecting the crypto market. One of the main effects of rising inflation would be strengthening the US dollar. A strong dollar tends to reduce the appeal of speculative assets like Bitcoin.”
Cryptocurrencies, which do not generate income or dividends, rely heavily on investors' perception of value.
“Demand for these alternative assets typically decreases when the dollar strengthens, putting downwards pressure on their prices,” said Mr Di Giacomo.
Bitcoin reached a high of $73,797 in March after rising for weeks amid optimism that demand for the dedicated ETFs would overwhelm the amount of tokens available for sale. The price subsequently retreated by more than 30 per cent by early August, before embarking on the current bull market run. Bitcoin has risen 70 per cent this year.
Bitcoin and the overall cryptocurrency market have proven to be highly volatile, where wild swings are influenced by anything from economic factors to tweets. The sector has also had to endure high-profile company closures, cyberattacks and criminal cases against top executives, most notably FTX’s Sam Bankman-Fried who was eventually sentenced to jail.
