Five factors that may support Bitcoin's next rally

Bitcoin is up around 60% this year, with the world's most famous cryptocurrency hitting a new all-time high in 2024, especially on the back of the US Securities and Exchange Commission's (SEC) approval of spot ETFs on Bitcoin and the "halving" of the reward received by the "miners", according to an article published by Business Insider, at the end of last week.

Estimates are that these two factors will continue to support the price of Bitcoin, but analysts believe that there are other elements that can catalyze a new rally of the world's most famous cryptocurrency.

• Cutting interest rates

Investors are keeping an eye on the Federal Reserve's moves, from which they expect interest rate cuts that may push stock prices higher. The same dynamic applies to Bitcoin, which has been trading as a speculative asset that appreciates when borrowing costs are lower, according to Business Insider.

In 2021, ultra-low interest rates were largely the catalyst for Bitcoin's rise to a new record that year, only for the trend to reverse when the Federal Reserve began its monetary tightening campaign.

"In the first quarter we had the "halving", but mainly it was the huge adoption of ETFs. Now we're looking at what the Fed can do," Galaxy CEO Mike Novogratz told Bloomberg earlier this month.

In his opinion, until short-term interest rates fall, Bitcoin will likely remain in a range between $55,000 and $73,000, writes Business Insider.

• Approval of spot ETFs on Ethereum

The approval of spot ETFs on Ethereum by the SEC at the end of last week is good news even for Bitcoin, according to Michael Saylor, founder of MicroStrategy, Cointelegraph writes.

Sayler pointed out that this will "accelerate institutional adoption" of Bitcoin, as previously wary investors will now recognize the crypto as a legitimate asset class. "I think mainstream investors will say there is now a crypto asset class; maybe we'll allocate 5% or 10% to this crypto asset class, but Bitcoin will be 60% or 70% of that allocation," he said late last week on the What Bitcoin Did podcast, according to Cointelegraph.

• Change in regulations

The crypto community is going through a period of searching for regulatory consistency, a factor that has often proved a stumbling block for Bitcoin. For example, the approval by the United States Securities and Exchange Commission (SEC) of spot ETFs on Bitcoin was preceded by a court action lost by the American market regulator.

Overall, sentiment in the crypto space regarding the legislation appears to be improving. Recently, the US House of Representatives passed a broad regulatory framework for the industry, which is being hailed as a victory for the sector. While its fate is unclear in the Senate, it may draw clearer rules for the crypto space, according to Business Insider.

• The November elections

Mike Novogratz believes things will become clearer on regulation after the US presidential election in November. The Galaxy CEO noted that Republican Donald Trump is a voice that increasingly supports the crypto industry, in contrast to President Biden's policies, Business Insider also writes.

And Geoff Kendrick, head of crypto research at Standard Chartered, believes a Trump victory would be broadly positive for Bitcoin. In his view, growing concerns about US deficit and debt trends will likely have a beneficial effect on Bitcoin's price as investors begin to look for alternative investments. That scenario could play out regardless of who wins the presidential race, because neither candidate has offered a plan to tackle government spending, Kendrick says.

• Extension of use

As the outlook for Bitcoin changes, the cryptocurrency is undergoing a reshaping of sorts, the aforementioned publication also writes. According to Bloomberg, developers are working to add functionality to the Bitcoin network that would make the crypto asset more than just a speculative asset, which may be another catalyst for the cryptocurrency.

For example, the Ordinals protocol allows users to store more than just Bitcoin on the BTC blockchain, but also to start trading assets like non-fungible tokens (NFTs). Already, daily trading volume on the Ordinals market reached $3.42 million in mid-May, according to Bitget CEO Gracy Chen, Business Insider writes.

"The emergence of Ordinals on Bitcoin in 2023, the BRC-20 token standard created later, and now the Runes token standard have helped increase the perception of Bitcoin as a platform network, not just a monetary network. And now, such projects are attracting considerable attention from venture investors," said a note from the Galaxy team, according to the aforementioned publication.

By midday yesterday, Bitcoin was trading at $68,480, according to Investing.com data.