The price of Bitcoin increased 4.4% to $116,031 this week on the back of heavy institutional buying and expectations of a Federal Reserve rate cut. The digital currency market is experiencing a stupendous surge, with the forerunner being Bitcoin. The combined market capitalization for all cryptocurrency has risen to approximately $4.06 trillion based on CoinMarketCap data.
Institutional Demand Fuels Bitcoin Growth
Latest reports show Bitcoin exchange-traded funds (ETFs) received $2.3 billion inflow during the last week with Fidelity and BlackRock being the front-runners, primarily driven by giant institutions. Institutional investors alone brought in over $579 million on September 12. Sources attribute the inflows to the expected rate cuts by the Federal Reserve that are likely to increase appetite for risk assets, including cryptocurrencies.
Whale Activity Drives Market
As demand for ETFs increases, whales are seizing the chance to sell. Two well-heeled pockets directed more than 1,100 BTC, valued at around $136 million, to exchanges this week.
Block trades indicate that some of the original believers are employing the price uptick as a chance to “take profit.” The thin trading range in Bitcoin over the past 24 hours is the reverberation of the tug-of-war between fresh demand and old supply.
Market Dynamics
The rally has also been aided by Bitcoin closing a CME futures gap, and analysts observing resistance at $117,500 and support at $115,000. Investor confidence is also supported by anticipations of a 25 basis-point cut in the rate, touted to deliver a liquidity boost in the market by the majority of observers.
Future Outlook for Bitcoin and Other Cryptocurrencies
Ahead, the market analysts anticipate Bitcoin to experience volatility in the wake of the upcoming Federal Open Market Committee (FOMC) meeting. The anticipation is mostly based on the Fed’s foreshadowing of future rate cuts. In the event that the Fed turns dovish, BTC can break past $120,000 with prices targeting $125,000.
Long-term investors are hopeful, with more than 70% of them indicating no intention to sell. This limited supply can set the stage for an increased price, particularly if institutional demand keeps rising.
