Bitcoin price rises to 5-month high as election and inflation questions loom

Topline

Bitcoin just hit its highest price since late spring as various market conditions, including next week's U.S. presidential election, impact the $1.4 trillion cryptocurrency.

Important facts

Why is Bitcoin in the black?

The crypto rally led by Bitcoin is a combination of several factors. Investors such as hedge fund billionaire Paul Tudor Jones have called for Bitcoin as a hedge against inflation as the administration and presidential candidates Kamala Harris and Donald Trump support policies that economists predict will add trillions of dollars to the national debt. And with the Federal Reserve cutting interest rates last month, skeptics believe monetary policy may not be able to correct inflation. Prices for the more conventional safe-haven gold have also surged, with gold up 6% since the September 18 rate cut. The rise in Bitcoin prices also coincided with increasing betting market odds for a Trump victory, as former Bitcoin skeptic Trump positions himself as a pro-Bitcoin candidate and calls for a “strategic national Bitcoin supply.” And there is ongoing upward pressure from spot Bitcoin exchange-traded funds approved by U.S. regulators in January, which attracted billions of dollars in inflows from institutional investors into the digital asset, according to Bernstein research.

Big number

66 billion dollars. That's how much Bitcoin is held by the spot Bitcoin ETFs run by legacy asset managers BlackRock and Fidelity as well as more digitally focused players like Grayscale, or about 5% of the global Bitcoin market.

Important background

Bitcoin is by far the most valuable crypto token, with a total market value more than four times that of the next largest digital asset Ethereum, which in turn is more than three times the size of the third largest crypto token Binance Coin, excluding the stablecoin peg. Bitcoin hit an all-time high of $73,750 in March and is up more than 300% since its low point in late 2022 during the “crypto winter,” when a series of high-profile bankruptcies for one-time industry giants, including the exchange rocked FTX the trust.