Bitcoin has had a fantastic year, reaching record highs. Yet in the past few weeks, it has been stuck in a rut. We discuss some of the factors that are helping to spur it on.
The climate seems tepid with Bitcoin investors at the moment, as everyone seems to be hedging their bets and waiting for it to break psychological barriers. Bitcoin has managed to regain its place above the $100,000 mark, albeit marginally. It continues to bounce between $90,000 and $100,000 at the upper echelons, with little signs of breaking past. However, there are several key indicators the bull run may begin anew.
BlackRock ups its shares in Strategy
At the time of writing, the USD to BTC rate had seen it return to the $97,000 mark. This shows there are short-term gains to be had for those who can keep an eye on the markets. However, long-term traders should set their value levels at $100,000. With so many factors at play, it seems too hard to see the wood for the trees. Its three-day drawback ended after US jobs data was better than expected. This saw its highest level since February 4th. This low unemployment and huge wage inflation mean that rates are unlikely to be slashed by the Federal Reserve.
Job data suggests that a surge in Bitcoin is imminent. It can’t be long before strong employment has a knock-on effect. Currently, people are opting for safe assets like gold; however, if more economic factors can show the tide has turned, then Bitcoin will surely be on the bull run many have predicted.
One strong indicator of the confidence currently comes from BlackRock. This global investment management company has always had faith in Bitcoin but recently upped its shares in Strategy. Formerly known as Microstrategy, they are the largest corporate holder of Bitcoin with around 471,107 BTC. This is a valuation of around $48 billion. BlackRock has increased its stake to 11.2 million, raising it just over 4% since September last year. This saw a marginal increase in the value of their stock.
This is despite a loss by the company in the last quarter of 2024 and a halt to purchases of Bitcoin. However, they are continuing in their aim to raise funds for further Bitcoin purchases. BlackRock itself is in preparations to launch its first Bitcoin ETF in Europe. This will be based in Switzerland and will follow a similar roadmap to their successful launch of spot Bitcoin ETFs in the US last year. The CEO of BlackRock, Larry Fink, has noted that he believes it can be a hedge against the devaluation of currencies.
Changes in the Czech Republic
News also emerged this week that the Czech Republic could become the world’s third-largest Bitcoin holder. This would push it past major economies like the United Kingdom and Germany. This comes from a plan that will see the Czech National Bank forge ahead to allocate 5% of its foreign reserves to Bitcoin.
The country has always had a pro-crypto stance, having a capital gains tax exemption for Bitcoin that has been in place for around three years. Should anyone hold the coin for more than three years, they pay no tax. It is hoped that this will spur long-term investment in digital assets. The Czech Republic is unique in that it is not bound by the European Central Bank and, as such, has greater freedom over its assets. Currently, the country has around 140 billion euros in foreign reserves.
This was met with a mixed response. Many praised the bold move to diversify the country’s reserves. Yet others believe it was a brash move and that the volatility of Bitcoin should be respected. For investors, it is one more step to mainstream financial adoption, and this will surely strengthen Bitcoin’s value in the markets.
Standard Chartered also backs Bitcoin
In a further boost from financial institutions, Standard Chartered this week announced they believed Bitcoin could reach $500,000 by 2028. This announcement was made by the company’s head of digital assets research, Geoffrey Kendrick. His focus was squarely on the success experienced in the Bitcoin ETF market, which launched last year. However, he also noted that the increasing popularity of Bitcoin and its expansions into traditional financial sectors would heighten volatility in the short term. Another key factor was the improving regulatory frameworks for Bitcoin, particularly in the US. This will see increased inflows, which will snowball as the infrastructure improves.
All of these factors are contributing to a climate that should be pushing Bitcoin up. Its sideways grind seems hard to break, but with so many competing factors, from changes in economies and regulations, Bitcoin seems just as volatile as ever. Short-term gains are still there to be had, but for the long-term investors, it may be a waiting game.
James is the head of marketing at Tamoco
