Topline

Bitcoin just hit its most expensive level since late spring as various market conditions, including next week’s US presidential election, impact the $1.4 trillion cryptocurrency.

Key facts

Why has Bitcoin risen?

The bitcoin-led crypto rally is a confluence of several factors. Investors such as hedge fund billionaire Paul Tudor Jones have called for bitcoin as a hedge against inflation as the administration and presidential candidates Kamala Harris and Donald Trump support policies that economists say will add trillions of dollars to the national debt. And with the Federal Reserve cutting interest rates last month, skeptics think monetary policy may be ill-equipped to correct inflation. Prices for the more conventional safe haven, gold, have also risen, with gold up 6% since the September 18 rate cut. The rise in bitcoin prices has also coincided with betting market odds rising for a Trump victory, as former bitcoin skeptic Trump positions himself as the pro-bitcoin candidate and calls for a “strategic national bitcoin stock’. And there is continued upward pressure from the spot Bitcoin exchange-traded funds that were approved by U.S. regulators in January and have attracted billions of dollars of inflows from institutional investors into the digital asset, according to Bernstein research.

Big number

$66 billion. That’s how much bitcoin is owned by the spot bitcoin ETFs run by legacy asset managers BlackRock and Fidelity and more digitally focused players like Grayscale, or about 5% of the global bitcoin market.

Important background

Bitcoin is by far the most valuable crypto token with a total market cap more than four times that of the next largest digital asset, ethereum, which in turn is more than three times larger than the third largest crypto token, the Binance coin, with the exception of the stablecoin. Tether. Bitcoin hit an all-time high of $73,750 in March and is up more than 300% from its late 2022 low during the “crypto winter,” when a series of high-profile bankruptcies for one-time industry titans, including exchange FTX, shook it to trust.