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As gold soars to a record-breaking $2,509.41 per ounce, many analysts believe Bitcoin could be next. Several factors are pushing Bitcoin’s rally, making a new peak seem within reach. From institutional investors flocking to Bitcoin ETFs to a macroeconomic climate that favors risk assets, the evidence is mounting.

Let’s break down why Bitcoin is climbing toward this crucial milestone.

Bitcoin’s Shrinking Exchange Supply

A major driver of Bitcoin’s price surge is the sharp decline in BTC held on exchanges. Over the past 30 days, exchanges saw a drop of 11,317.53 BTC, while large holders, known as whales, continue to scoop up more.

Notably, strategic withdrawals from platforms like Coinbase Pro and Bitfinex resulted in over 23,000 BTC being moved into cold storage. This signals strong confidence in Bitcoin’s long-term value. In addition, long-term investors have bought the recent dip, accumulating over 500,000 BTC since July 30.

Rising M2 Money Supply

The M2 Money supply has hit an all-time high, meaning more money is flowing into the economy. Historically, this increase has led to more spending on riskier assets like Bitcoin. When the M2 supply peaked in January 2024, the crypto market began to follow. If history repeats itself, Bitcoin could soon benefit from this trend.

Bitcoin Halving: The Next Big Bull Run?

The upcoming Bitcoin halving event is another reason for optimism. Past halvings have led to massive gains after an initial consolidation period. In fact, Bitcoin jumped by 8,839%, 285%, and 548% following the halvings in 2012, 2016, and 2020, respectively. Could a similar surge be on the horizon?

Mighty Bitcoin ETF Flows

Strong inflows into Bitcoin ETFs are also boosting Bitcoin’s price. On August 16 alone, spot Bitcoin ETFs received $35.9 million, part of a week that saw $32.4 million in positive flows. Big players like BlackRock, Fidelity, Bitwise, and Ark were among those making substantial investments, contributing to this upward pressure on Bitcoin.

These inflows increase liquidity and buying activity, helping sustain Bitcoin’s recent momentum.

Growing Institutional Interest

Institutional adoption of Bitcoin ETFs has gained significant traction, as reflected by recent filings and disclosures. Goldman Sachs revealed in a 13F filing that it held substantial positions in various Bitcoin ETFs as of June 30, which included $238.6 million in iShares Bitcoin Trust, $79.5 million in Fidelity Bitcoin ETF, and other notable holdings.

Morgan Stanley also revealed its holdings of 5,500,626 shares of BlackRock iShares Bitcoin Trust, valued at $187.79 million. Pension funds are also now considered for these investments.

With the spot Bitcoin ETFs and the Ethereum ETF approved, the likelihood of other ETFs popping up is really high. It is getting easier for institutions to invest through ETFs. 

Upcoming Presidential Elections

With the US presidential elections soon approaching, the sentiment of the market is highly influenced by the political sector. With Donald Trump’s pro-crypto stance and Kamala Harris’ crypto reset, this could be another reason driving Bitcoin bullish. 

Donald Trump has stated that he is laying out plans to ensure that the US will be the crypto capital of the planet and the bitcoin superpower of the world! When he got shot recently, the market started skyrocketing as the market was pricing in a Trump Presidency. 

Also, historically, elections have been pivotal moments for financial markets, often leading to increased volatility. 

Fed Rate Cut Expectations

The anticipation of a Federal Reserve rate cut is adding to Bitcoin’s bullish outlook. According to the CME FedWatch Tool, there’s a 75% chance of a 25 basis point cut at the upcoming FOMC meeting, with 25% of participants expecting a 50 basis point cut. A rate cut could weaken the U.S. dollar, which would likely boost Bitcoin and other assets.

With falling exchange balances, strong institutional inflows, and favorable macroeconomic conditions, Bitcoin looks poised for a potential new all-time high. These factors are driving optimism in the market and could pave the way for Bitcoin’s next major rally.

Also Check Out: China’s Crypto U-Turn? Market Poised for Explosive Growth Amid Bitcoin Lull Period!

The Bitcoin rally is heating up. Are you in or out? Share your stance.

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