Bitcoin traders are targeting the $70,000 price level last reached in June once again after cryptocurrencies briefly dipped across the board late Friday and US exchange-traded funds continued to see steady inflows.
“This is a continuation on the trends we’ve recently seen established in the space,” said Stephane Ouellette, co-founder and chief executive officer of FRNT Financial. “We’re in the early phases of a global liquidity cycle and we would expect lower interest rates and fiscal policy liquidity to continue to act as a tailwind for Bitcoin over time.”
Cryptocurrencies dropped at the end of last week, following a report that the US was investigating stablecoin issuer Tether Holdings Ltd. for possible violations of sanctions and anti-money-laundering rules. A Tether spokesperson said the firm had no knowledge of any investigations.
Stablecoins such as Tether play a crucial role as gateways to cryptocurrency markets because they’re an intermediary step for using fiat money to buy tokens like Bitcoin, and vice versa. They’re also often used as collateral for crypto loans. Tether is the world’s most-traded cryptocurrency.
Enthusiasm around the largest digital asset comes as the US presidential election draws near. Digital asset inflows reached $910 million last week, pushing year-to-date inflows to $27 billion, nearly triple the 2021 record, according to a report from CoinShares.
“We believe that current Bitcoin prices and flows are heavily influenced by US politics, with the recent surge in inflows likely linked to the Republicans’ poll gains,” James Butterfill, head of research at CoinShares, said in the note.
Inflows came almost entirely from Bitcoin. Ethereum, the second-largest digital asset, saw outflows of $35 million last week — the largest of any asset during the period, according to the report.
Options traders have also been increasing bets that Bitcoin will reach a record high of $80,000 by the end of November regardless of who wins the US election. The implied volatility for Bitcoin options coming due around the Nov. 5 election day is elevated, with the wagers skewed toward call options that give the buyer the right to buy the cryptocurrency at new highs.
Bitcoin reached an all-time high of $73,797 in March after surging for weeks amid optimism that demand for the ETFs would overwhelm the amount of tokens available for sale. The price subsequently retreated by more than 30% by early August, before embarking on the current bull market run.
“Last week, [billionaire hedge fund manager] Paul Tudor Jones highlighted Bitcoin as an inflation hedge in a world where all signs a pointing towards fiat debasement,” Ouellette said. “This dynamic will continue to benefit Bitcoin over-time as new entrants make portfolio allocation decision for the next market cycle that include Bitcoin.”
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