Bitcoin’s recent breakout to $64,000 has been fueled by several key factors, according to a new analyst note from Bernstein. The report points to a confluence of events that have contributed to Bitcoin’s impressive 9% surge over the past seven days.
One of the main drivers is the recent 50-basis point rate cut, which has bolstered Bitcoin as an alternative asset class. With interest rates decreasing and gold prices reaching record highs, investors are increasingly looking towards Bitcoin as a hedge against inflation and a potential store of value. Bernstein notes that “Any signal of loose monetary policy and potentially weaker dollar, is positive for Bitcoin.” This trend is reflected in Bitcoin’s performance year-to-date (YTD), with a 45% gain compared to gold’s 27% increase.
Another significant factor is bipartisan support for digital assets. Both Vice President Kamala Harris and former President Donald Trump have signaled their support for cryptocurrencies. While the crypto community seeks more policy clarity from the current administration, the growing support from both sides of the political aisle is a positive sign for the industry.
Bitcoin ETF momentum is also playing a crucial role in the recent rally. Despite price volatility, Bitcoin ETF inflows remain robust, reaching a total of $17 billion to date. Bernstein expects a “re-acceleration of inflows” as more financial institutions approve these products, further fueling demand for Bitcoin.
Meanwhile, Bitcoin miners have demonstrated resilience following the halving event, with network hash power bouncing back to pre-halving levels of 630 EH/s. This indicates that miners have successfully adapted to the reduced block rewards, demonstrating the network’s strength and stability.
The recent rally has also been aided by reduced selling pressure. Major Bitcoin sales by the German and U.S. governments have concluded, and MicroStrategy’s recent $2.1 billion capital raise for Bitcoin acquisition further solidifies its commitment to the asset class. MicroStrategy now holds 252,220 BTC, representing roughly 1.3% of Bitcoin’s total supply.
Bernstein sees potential upside for Bitcoin mining stocks, which have lagged behind Bitcoin’s recent gains. The report highlights opportunities in pure-play Bitcoin miners like Core Scientific, Riot Platforms, CleanSpark, and Marathon Holdings, all of which could be poised for a rebound. The report also notes continued strength in crypto-exposed stocks like MicroStrategy, which is considered “the most direct and largest market cap – leveraged equity proxy on Bitcoin price.” Robinhood, on the other hand, is benefiting from increased crypto trading revenues.
With these bullish factors in play, Bernstein’s analysis suggests that Bitcoin’s rally could have further room to run, particularly if institutional adoption continues to grow through ETFs and other investment vehicles. The influence of Bitcoin as an institutional asset class is expected to be a central topic at Benzinga’s upcoming Future of Digital Assets event on November 19th.
