Bitcoin price has surged to approximately $122,490, at the time of publishing, coming to a kissing distance from its last all-time high of around $124,000. According to CNBC, this is about 1% below its all-time high price that it reached in mid-August.
Following a breakdown in federal budget negotiations that triggered a U.S. government shutdown on Wednesday, investors have turned to Bitcoin, driving its price up 12% this week and up close to 2% in the last 24 hours. The ‘uptober rally’ is driven by several key factors, including institutional adoption, favorable macroeconomic conditions, and technical momentum.
Source: CoinMarketCap
Institutional adoption and ETF demand
The approval of Bitcoin exchange-traded funds (ETFs) has opened the floodgates for institutional investment. Analysts from Standard Chartered predict that Bitcoin could reach a new all-time high as soon as next week.
Standard Chartered’s Geoff Kendrick, in a note, said, “During the previous Trump shutdown in 2018-19, Bitcoin was in a different place than now, so it did little… However, this year bitcoin has traded with ‘U.S. government risks’ as best shown by its relationship to U.S. treasury term premium.”
Kendrick said Bitcoin has deviated from a pattern that previously saw prices fall 18 months after the halving. Standard Chartered expects a new high soon and ultimately, the crypto will hit $135,000 after that.
Similarly, JPMorgan analysts expect Bitcoin to hit $165,000 by year-end, driven by the acceleration of “the debasement trade,” with retail investors leading the charge.
Macroeconomic tailwinds leading to BTC momentum
Investor optimism is fueled partially by weaker-than-expected private-sector jobs data from ADP, suggesting the Federal Reserve may lower interest rates during its upcoming meeting on October 29. Lower interest rates typically benefit riskier assets like cryptocurrencies and equities, as they make traditional savings and bonds less attractive.
On Friday, news that the U.S. Treasury has exempted crypto holders from unrealized gains on crypto asset holdings, excusing crypto whales and corporate treasury firms like Strategy from being subject to the Corporate Alternative Minimum Tax (CAMT).
Technical indicators
Bitcoin is currently testing resistance levels near $123,000. A breakout above this level could pave the way for further gains. Support levels are identified at $117,000 and $110,000, which traders will monitor for potential pullbacks.
As Bitcoin nears its previous all-time high, market participants are closely watching these technical levels and forecasts to gauge the sustainability of the current rally.