Bitwise CIO Matt Hougan said Bitcoin (BTC) is poised for a significant rally to a “six-figure” price amid a convergence of several key factors driving investor enthusiasm.
In a social media post on Oct. 18, Hougan highlighted a surge in exchange-traded fund (ETF) flows, heightened by a reacceleration of investments into Bitcoin-based financial products amid heightened institutional interest in digital assets.
Growing appetite
Bitcoin, the only crypto valued at over $1 trillion, has demonstrated resilience and growth amid increasing demand from both institutional and retail investors. The flagship crypto climbed back near all-time high prices and was trading just shy of $69,000 as of press time
Bloomberg senior ETF analyst Eric Balchunas recently highlighted that US spot Bitcoin ETFs have surpassed $20 billion in net flows, with the broader Bitcoin ETF sector managing over $65 billion in assets.
The rapid growth, achieved in less than a year, has far outpaced traditional asset-tracking ETFs like gold, which took six years to reach similar levels.
According to Hougan, the growing appetite for Bitcoin ETFs signals a shift in market sentiment, especially as institutional players seek exposure to digital assets.
Elections and rate cuts
Hougan, along with other industry analysts, also pointed to next year’s US presidential elections as a potential catalyst for Bitcoin’s price.
Former President Donald Trump has taken the lead in on-chain betting polls, which has added to speculation that the political landscape could further drive Bitcoin adoption due to his vocal support for the industry.
Additionally, Hougan highlighted bipartisan agreements on escalating fiscal deficits, dubbing them “infinite deficits.” The agreements would continue a loose fiscal policy that could weaken fiat currencies, making Bitcoin’s deflationary nature more attractive to investors.
Meanwhile, economic stimulus measures in China, combined with global interest rate cuts by both the Federal Reserve and the European Central Bank, are expected to further fuel demand for Bitcoin, as low-interest-rate environments encourage risk-on behavior in financial markets.
Supply shock
Hougan also noted that the post-halving supply shock is “starting to bite” as whales and ETFs continue to accumulate Bitcoin. On-data shows that large Bitcoin holders have been accumulating at unprecedented rates, with whale wallets now controlling 9.3% of the total supply.
Meanwhile, CryptoQuant data revealed that new Bitcoin whales have invested nearly $108 billion as of Oct. 6, representing a 13x increase this year. These new whales now account for 48.8% of Bitcoin’s total realized cap. This marks the highest amount ever spent by these investors, nearly matching the $113 billion held by “old whales.”
The surge in new whale participation is seen as a “generational shift,” and their realized cap is expected to soon surpass that of older whales. Realized cap, which measures the value of each Bitcoin based on its last transaction price, is used to assess the value stored in Bitcoin.
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