After hitting an all-time high in a month... The unusual 'Bitcoin rally'

Bitcoin has set a new all-time high. It is analyzed that this is due to revived investment sentiment as expectations for the US Federal Reserve (Fed) rate cut spread.

According to the domestic cryptocurrency exchange Upbit on the 16th, Bitcoin hit a domestic record high, trading at ₩167 million at one point on the 11th. In the global market, it set a new monthly high, hitting $123,677 on the 13th.

The reason behind Bitcoin's strong performance is that US inflation met market expectations, boosting hopes for a Fed rate cut next month. Cryptocurrency analysis firm 10X Research stated in a report, “Conditions for a sustained rally are being established, such as narrowing credit spreads (the interest rate gap between government and corporate bonds) and rising loan growth,” and analyzed, “Although the Fed remains cautious about rate cuts, if there is a policy shift, investors may quickly move funds into high-risk assets.”

Inflows into Bitcoin spot Exchange-Traded Funds (ETF) also continued. According to Trader T, on the 12th, there was a net inflow of $66.32 million (about ₩9.19 billion) into US Bitcoin spot ETFs. This marked five consecutive trading days of net inflow.

Specialized media outlet Cointelegraph commented, “The assets under management for Bitcoin spot ETFs ($150 billion) are soon expected to surpass those of gold ETFs ($198 billion),” adding, “This will help firmly establish the perception that Bitcoin is not a risk asset, but rather a reserve asset.”

Expanding global liquidity (M2) also influenced Bitcoin's strength. M2 is an indicator that shows how much money is circulating in the market. Within the cryptocurrency market, an increase in M2 is interpreted as a driver for Bitcoin’s price to rise. Last month, M2 hit an all-time high of $55.5 trillion, fueling expectations for an additional Bitcoin rally. Crypto analyst Kevin Svenson argued, “Bitcoin could soar up to 30% in the next rally, reaching between $140,000 and $150,000,” and said, “M2 and Bitcoin show almost identical trends.”

Reporter Lee Jin Jeong