Bitcoin price rises to 7-month high as election, inflation issues swirl

On By Littum

Upper line

Bitcoin just hit its most expensive level since the spring as several market conditions, including next week’s US presidential election, affect the $1.4 trillion cryptocurrency.

Key facts

Bitcoin rose about 6% to as high as $73,544 around 3:00 p.m. EDT, or 19:00 Greenwich Mean Time, Tuesday, the highest price for the token since March 14 (price movements in the bitcoin market around the clock are most often measured in GMT).

That moves bitcoin’s October gain to 13%, outpacing the leading US stock index S&P 500’s 1% gain this month.

Other major digital assets rose on Tuesday with ethereum up 4% to a 10-day high of $2,637, Binance coin up 2% to an eight-day high of $608 and Solana up 2% to a three-month high of $182.

Shares of companies involved in bitcoin mining, the energy-intensive process by which bitcoins are unlocked from the digital blockchain, also rose: Shares in Core Scientific, Marathon Digital and Riot Platforms rose each Tuesday, rising at least 15% each in October.

Why is Bitcoin up?

The bitcoin-led crypto rally is a confluence of several factors. Investors such as hedge fund billionaires Paul Tudor Jones has touted bitcoin as a hedge against inflation as the administration and presidential candidates Kamala Harris and Donald Trump support policies that economists project will add trillions of dollars to the national debt. And with the Federal Reserve cutting interest rates last month, skeptics believe monetary policy may be ill-equipped to correct inflation. Prices for the more conventional safe-haven asset, gold, have also risen, with gold up 6% since the September 18 rate cut. The rise in bitcoin prices has also coincided with the increasing odds in the betting market for a Trump victory, as former bitcoin skeptic Trump positions himself as the pro-bitcoin candidate and calls for a “strategic national bitcoin stockpile.” And there is continued upward pressure from spot bitcoin exchange-traded funds approved by U.S. regulators in January, which attracted billions of dollars of inflows from institutional investors to the digital asset, according to Bernstein research.

big number

66 billion dollars. That’s how much bitcoin is held by the spot bitcoin ETFs run by legacy asset managers BlackRock and Fidelity and more digital-focused players like Grayscale, or about 5% of the global bitcoin market.

Key background

Bitcoin is by far the most valuable crypto token with a total market capitalization that is more than four times that of the second largest digital asset, ethereum, which in turn is more than three times that of the third largest crypto token, the Binance coin, excluding the stablecoin Tether. Bitcoin hit an all-time high of $73,750 in March and is up more than 300% from its nadir in late 2022 during the “crypto winter,” when a series of high-profile bankruptcies of one-time industry titans, including exchange FTX, shook confidence.