Bitcoin has surged to a new all-time high, breaching $125,000 over the weekend, driven by a combination of macroeconomic factors and increasing institutional adoption. Analysts suggest this rally could be the start of a renewed accumulation phase, potentially fueling a further climb to $150,000 before the year concludes.
The latest surge, which saw Bitcoin reach $125,700, briefly pushed its market capitalization above $2.5 trillion. This rally is attributed to several factors, including the U.S. government shutdown, which has renewed interest in Bitcoin's role as a store of value. According to Fabian Dori, chief investment officer at Sygnum Bank, the political dysfunction associated with the shutdown underscores the appeal of decentralized assets like Bitcoin. Dori also noted that broader market conditions, such as loose liquidity, a service-led acceleration in the business cycle, and narrowing underperformance relative to equities and gold, have also contributed to the increased attention on digital assets.
The U.S. government shutdown's impact on the crypto market hinges on how it influences the Federal Reserve's interest rate decisions. Jake Kennis, senior research analyst at Nansen, suggests that the crypto market could benefit if a resolution to the shutdown reduces uncertainty and encourages the Fed to adopt a more dovish stance. The markets have already priced in a near-certainty of a rate cut in October, with major banks like Bank of America and JPMorgan Chase moving up their forecasts due to soft labor data and the impact of the government shutdown. Goldman Sachs is even projecting two more cuts before the end of the year.
Another significant factor driving Bitcoin's price is the consistent inflows into Bitcoin ETFs. U.S. spot Bitcoin ETFs saw a net inflow of $3.24 billion last week, reflecting increased confidence among large funds and financial institutions. BlackRock's IBIT now holds over 890,000 BTC, and institutions like Standard Chartered and Citigroup have increased their year-end targets to $135,000 and $133,000, respectively. These inflows reduce the available supply of Bitcoin, driving prices higher.
Moreover, on-chain data indicates a decrease in Bitcoin held on exchanges, suggesting that owners are planning to hold long-term rather than sell. CryptoQuant reported a seven-year low in exchange reserves, with a sharp decline in recent weeks, and Glassnode reported that over 114,000 Bitcoins (worth over $14 billion) have left exchanges in the past two weeks. This trend signals a shift towards institutional wallets, self-custody, and treasury holdings.
Technical indicators also point to strong momentum. Bitcoin price charts reflect ongoing strength, with the MACD remaining bullish and the RSI indicating strong momentum without being overbought. Now that the previous high of $123,944 has been surpassed, analysts are eyeing $128,000 as the next significant level.
The surge also coincides with "Uptober," a term reflecting Bitcoin's historical outperformance in October. Over the past decade, Bitcoin has gained in nine of ten Octobers, averaging a 21% rally.
Despite the bullish sentiment, analysts caution that volatility remains a risk. While institutional investors and Asian retail activity fuel demand, whale sales and profit-taking waves could trigger potential volatility. Critical support levels at $109,898 and $105,000 are being closely monitored, and a break below the former could trigger larger declines. Conversely, a breakout above $115,000 could test $120,000, aligning with historical seasonal strength.
