5 min readAfter rising for the past four straight days, Bitcoin is pausing for breath above 72,000, its highest level in five months. A combination of fundamental tailwinds, encouraging technicals, and fear of missing out (FOMO) could help the world’s largest cryptocurrency reach a record high by the end of the week.
Trump trade
Bitcoin has surged in recent weeks, boosted by rising speculation that Republican candidate Donald Trump will beat Democratic nominee Kamala Harris in the November 5th election.
Prediction markets are largely favoring a Trump victory, although polls continue to point to a tightly contested election. Many say it’s still too close to call.
Trump has presented himself as the pro-crypto candidate across his election campaign, promising friendlier regulation and to make the US the Bitcoin capital of the world.
Technicals
The technical picture is also favourable to further Bitcoin gains. Bitcoin has broken out above its seven-month-long descending channel, pushing above the key 70,000 psychological level to a high of 72,500. However, some caution persists ahead of a slew of US economic data this week, which comes ahead of next week’s Federal Reserve interest rate decision.
Risk events
Ahead of next week’s Federal Reserve interest rate decision, several key U.S. economic data points will be released, including Q3 GDP data today and US core PCE figures tomorrow, the Federal Reserve’s preferred gauge for inflation and non-farm payroll report on Friday.
The data comes as the US dollar trades at a three-month high amid expectations that the Federal Reserve could cut interest rates more gradually. The Federal Reserve is expected to reduce rates by a smaller 25 basis points when it meets next week. However, robust data could mean this will be the last rate cut this year. A lower interest rate environment is more beneficial for risk assets such as Bitcoin.
Wallet profitability & Fear & Greed
According to data from the block, 98% of Bitcoin holders are in profit compared to 1.2% who are currently at break even. Typically, when wallet profitability rises, it lifts investor confidence, and Bitcoin holders then become more willing to hold the tokens rather than sell. This scenario can be attributed to a feeling of fear of missing out (FOMO), with new buyers keen to enter the market.
Separately, the fair and greed index has risen to 77, measuring extreme greed, up from 72 just yesterday to 61 a month ago.
BTC ETFs rise on strong demand
Meanwhile, Bitcoin ETFs continue to see strong inflows. The US Bitcoin ETF had $870 million net inflows on Tuesday, marking its third-highest daily increase as the Bitcoin price flirts with a record high. Year to date, inflows for the 12 funds are more than $23 billion, highlighting strong institutional demand.
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