Bitcoin Continues to Reach All-Time Highs

Korea Economic Daily

Summary

Bitcoin has set new record highs both domestically and internationally, fueled by expectations of a U.S. rate cut and consistent capital inflows into spot ETFs.
According to the report, conditions for a Bitcoin rally are being met by factors such as a narrowing credit spread and rising loan growth, with increased potential for fund movement into high-risk assets if further rate cuts are enacted.
The record-high level of global liquidity (M2) is also seen as a positive factor for Bitcoin's continued strength and future rally prospects.

Spot ETF Popularity... Expectations of a Rate Cut Next Month

Bitcoin has broken its all-time high. This is attributed to revived investor sentiment as expectations for an interest rate cut by the U.S. central bank (Fed) spread.

According to domestic cryptocurrency exchange Upbit on the 17th, Bitcoin set a new domestic record, trading at 167 million KRW at one point on the 11th. In the global market, it reached $123,677 on the 13th, setting a new monthly high.

The bullish movement in Bitcoin is due to expectations of a rate cut by the Fed next month, as U.S. inflation (rising prices) matched market forecasts. Cryptocurrency analysis firm 10X Research said in a report that "the conditions for a prolonged rally are being met, including a narrowing credit spread (the interest rate gap between government and corporate bonds) and an increase in loan growth," and analyzed that "although the Fed remains cautious about cutting rates, if it changes direction, investors will quickly shift funds to high-risk assets."

Capital continued to flow into Bitcoin spot ETFs. According to Trader T, on the 12th, there was a net inflow of $66.32 million (about 9.19 billion KRW) into U.S. Bitcoin spot ETFs. This marks five consecutive trading days of net inflow.

Cryptocurrency media outlet Cointelegraph commented, "Bitcoin spot ETF assets under management ($150 billion) are soon expected to surpass those of gold ETFs ($198 billion)," and assessed that "this will help strengthen the perception that Bitcoin is not a risk asset but a reserve asset."

An increase in global liquidity (M2) has also contributed to Bitcoin's uptrend. M2 indicates the amount of money circulating in the market. In the crypto market, when M2 rises, it is recognized as a factor for Bitcoin price growth. Last month, M2 reached a record high ($55.5 trillion), prompting forecasts of further rallies for Bitcoin. Cryptocurrency analyst Kevin Svenson claimed, "Bitcoin may rise up to 30% in its next rally, reaching $140,000 to $150,000," and noted, "The M2 indicator and Bitcoin have shown nearly identical trends."

Jeong Eui-jin, reporter justjin@hankyung.com

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