- Bitcoin has risen by over 60% in 2024 due to the spot ETF approval in January and the recent halving event.
- Developers are working to add features to the Bitcoin network that could lead to a rise in prices.
- The increasingly popular cryptocurrency could also rally on interest rate cuts, regulatory easing and the November elections.
Bitcoin has hit records this year, driven by two catalysts: the approval of a spot ETF in January and the recent halving. The wildly popular cryptocurrency is up more than 60% year to date and was trading about 6% down from its all-time high hit in March on Friday.
Both factors are expected to continue to drive Bitcoin prices higher, but now that momentum has slowed, investors are wondering where to look for further gains. Analysts say there is plenty of room for Bitcoin prices to continue to rise.
Below we provide more details on the four upcoming catalysts.
1. Lower interest rates
Investors are keeping an eye on the prospect of the Federal Reserve cutting interest rates, anticipating that stocks might rise as a result. The same dynamic applies to bitcoin, which has been trading like a speculative asset that rises when borrowing costs are low.
In fact, ultra-low interest rates in 2021 were the main factor that propelled Bitcoin to record highs that year, before the rally reversed once the Fed began tightening monetary policy.
“We had the halving coming up in the first quarter, but the biggest driver was the rapid ETF adoption. As that gets priced in, it will be interesting to see what the Fed does,” Galaxy CEO Mike Novogratz told Bloomberg earlier this month.
Bitcoin will likely remain in the $55,000 to $73,000 range until short-term interest rates actually decline, he said.
2. Regulatory transition
At the moment, the crypto community is also looking for consistency on the regulatory front, which has often been a stumbling block for Bitcoin: For example, the SEC’s eventual approval of a spot ETF was preceded by a court loss.
But legal sentiment around cryptocurrencies appears to be adjusting: Oppenheimer executive director Owen Lau told CNBC in early May that one of the catalysts for Bitcoin's future could be the imminent stablecoin bill, which could be passed as soon as this year.
Meanwhile, the U.S. House of Representatives just passed a wide-ranging regulatory framework for the cryptocurrency industry in what is being hailed as a victory for the sector. While its fate in the Senate is unclear, this will bring clarity to the crypto world.
3. November Elections
But real regulatory clarity will likely come after the presidential election, Novogratz said, noting that Republican candidate Donald Trump has been increasingly vocal in his support for the industry in contrast to President Biden's policies.
Jeff Kendrick of Standard Chartered Bank also said in a May note that a Trump victory would be mostly positive for Bitcoin.
He added that growing concerns about the U.S. budget deficit and debt trends will likely drive up the price of Bitcoin as investors start looking for alternative investments. This could happen under either candidate, Kendrick said, as neither has offered a plan for how they will approach government spending.
4. Expanded use
While perceptions of Bitcoin are changing, the cryptocurrency itself is undergoing a remake of sorts.
According to Bloomberg, developers are hard at work adding features to the Bitcoin network. These efforts aim to make the cryptocurrency more than just a speculative asset, and could be a new catalyst as projects rapidly come online.
For example, the recently released Ordinals protocol allows users to store assets on the BTC blockchain, not just bitcoin, but also non-fungible tokens and other assets. The Ordinals marketplace has already seen daily trading volumes reach $3.42 million in mid-May, Gracie Chen, managing director at Bitget, wrote to X.
“With Ordinal coming to Bitcoin in 2023, then the BRC-20 token standard, and now the Rune token standard, there’s been a lot of interest in thinking about Bitcoin as a cryptocurrency. platform “We're building a network, not just a financial network,” Galaxy wrote in the memo, adding that projects like this are currently receiving significant attention from venture capitalists.
