Bitcoin Price Breaks $65,000: What’s Fueling the Current BTC Price Rally?

Key Takeaways:

• Bitcoin’s Rally Above $65,000: Bitcoin price reclaimed the $65K level after briefly dipping, fueled by positive momentum in the US stock market and growing institutional interest.
• Macroeconomic Tailwinds: Lowered US interest rates and fears of a stock market bubble easing have contributed to the bullish sentiment around Bitcoin’s recent price surge.
• Correlation with Global Monetary Base: Bitcoin price shows a strong correlation with the global monetary base (M2), historically increasing when liquidity is added to the economy.
• Growing Institutional Demand: Inflows of $242 million into Bitcoin ETFs in just two days signal increasing confidence from institutional investors, further boosting Bitcoin price rally.
• Impact of Tech and AI Sectors: Optimism in the tech sector, driven by companies like Micron and AI development, has helped create favorable conditions for Bitcoin and other risk assets.

Bitcoin price has surged back above the $65,000 mark, sparking excitement among investors and raising the question: will it hold this level or break through to even higher prices? While the crypto market has been notoriously volatile, several factors indicate that the current rally could have staying power.

After briefly dipping to $62,705 on September 26, Bitcoin price bounced back with a 3% gain, reclaiming the $65,000 level. This quick recovery was driven by a positive opening in the United States stock market, with the S&P 500 hitting a new all-time high. Bitcoin’s price often moves in tandem with major stock indices, and this rally was no exception.

BTC/USD | Source: TradingView

Macroeconomic Trends and Investor Sentiment

Several macroeconomic factors are working in Bitcoin price’s favor, suggesting the rally could continue. Lowered interest rates in the United States and renewed interest from long-term institutional investors are helping fuel the surge. Concerns about a potential stock market bubble are easing as signs of robust economic growth continue to emerge. Additionally, US housing prices have reached new highs, which further stabilizes investor sentiment.

A rally in tech stocks, driven by major players like Alibaba, Tesla, and Apple, has contributed to overall market optimism. The tech sector has been a major growth engine in global stock markets, and its success could further strengthen Bitcoin’s position. According to Michael Matousek, head trader at US Global Investors, the excitement around artificial intelligence and tech innovation has fueled significant market gains, although he cautions that some hype may be overblown in the short term.

Bitcoin’s Correlation With the Global Monetary Base

Investment strategist Lyn Alden pointed out that Bitcoin has a strong correlation with the global monetary base (M2), which refers to the total amount of money in circulation and bank deposits. Historical data shows that Bitcoin price tends to increase in over 80% of cases when liquidity is added to the monetary base. This is a crucial factor as governments around the world begin rolling out new stimulus measures following a temporary pause during the last 18 months.

Interestingly, the S&P 500 has also shown a strong correlation with the M2 supply, at 81%. This data suggests that, rather than being an uncorrelated asset, Bitcoin may further establish itself as a hedge against inflation and government money-printing policies.

Tech Stocks, AI, and the Broader Market Impact

Bitcoin price rise on September 26 was partly driven by developments in the tech sector, particularly memory chip supplier Micron’s improved revenue guidance. Micron, a key player in the AI supply chain, announced a rise in expected revenue for the quarter, which boosted confidence across the market. As AI technology and infrastructure continue to develop, investors are becoming more optimistic about tech stocks, which in turn influences riskier assets like Bitcoin.

Moreover, positive news regarding the U.S. economy added to the bullish momentum. The third estimate of the US gross domestic product (GDP) for Q2 came in at 3%, signaling solid growth. China’s recent economic stimulus efforts also spurred optimism, leading to the largest weekly gain in the CSI 300 stock index in over a decade.

Institutional Demand is Growing

One of the most significant developments supporting Bitcoin price’s recent rally is the inflow of $242 million into Bitcoin exchange-traded funds (ETFs) over two days. This marked a sharp change in sentiment, as institutional interest had been subdued following the relatively slow start of BlackRock’s iShares Bitcoin Trust ETF, which saw only $5 million in inflows after launching in late August.

The growing demand for Bitcoin ETFs shows that institutional investors are warming up to the asset, seeing it as a viable addition to their portfolios. As this trend continues, it could provide additional momentum for Bitcoin to break through to higher price levels.

Read more: Top Bitcoin ETFs to Invest: The Future of Crypto Investing

Will Bitcoin Price Hold Above $65,000?

While Bitcoin price rally above $65,000 is encouraging, there are still factors that could cause short-term volatility. Corrections following such rapid gains are not uncommon in the crypto market. However, the combination of macroeconomic tailwinds, strong institutional demand, and a buoyant tech sector suggests that the current rally may have more room to grow.

If these favorable trends persist, Bitcoin price could soon challenge the $70,000 mark. Investors should keep an eye on the broader economic landscape and Bitcoin’s correlation with stock markets, as these will likely play a key role in determining the crypto’s future price movement.

Read: Bitcoin Price Prediction

Conclusion

Bitcoin price surge above $65,000 is a significant milestone, driven by a combination of strong institutional demand, favorable macroeconomic conditions, and rising confidence in the tech sector. Although short-term corrections are possible, the underlying factors suggest that Bitcoin could maintain its upward trajectory, with $70,000 being the next potential target. As Bitcoin continues to gain mainstream acceptance and institutional interest grows, its role as a hedge against inflation and government monetary policies becomes clearer, positioning it well for future growth.

Source: CoinTelegraph