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Bitcoin price rises to 5-month high as election and inflation questions loom

Topline

Bitcoin just hit its highest price since late spring as various market conditions, including next week's U.S. presidential election, impact the $1.4 trillion cryptocurrency.

Important facts

Bitcoin rose about 3% to as high as $71,887 at about 10:30 a.m. EDT or 2:30 p.m. Greenwich Mean Time on Tuesday, the highest price for the token since May 21 (the biggest price moves are on the 24/7 Bitcoin market). usually measured in GMT).

This brings Bitcoin's October gain to 11%, exceeding the 1% rise in the leading American stock index S&P 500 this month.

Other major digital assets rallied on Tuesday: Ethereum rose 4% to a 10-day high of $2,637, Binance Coin gained 2% to an eight-day high of $608 and Solana rose by 2% to a three-month high of $182.

Shares of companies involved in Bitcoin mining, the energy-intensive process by which Bitcoins are unlocked from the digital blockchain, also rallied: Shares of Core Scientific, Marathon Digital and Riot Platforms each rose on Tuesday and are in the October each rose by at least 15%.

Why is Bitcoin in the black?

The crypto rally led by Bitcoin is a combination 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 predict will add trillions of dollars to the national debt. And with the Federal Reserve cutting interest rates last month, skeptics believe monetary policy may not be able 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 also coincided with increasing betting market odds for a Trump victory, as former Bitcoin skeptic Trump positions himself as a pro-Bitcoin candidate and calls for a “strategic national Bitcoin supply.” And there is ongoing upward pressure from spot Bitcoin exchange-traded funds approved by U.S. regulators in January, which attracted billions of dollars in inflows from institutional investors into the digital asset, according to Bernstein research.

Big number

66 billion dollars. That's how much Bitcoin is held by the spot Bitcoin ETFs run by legacy asset managers BlackRock and Fidelity as well as 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 value more than four times that of the next largest digital asset Ethereum, which in turn is more than three times the size of the third largest crypto token Binance Coin, excluding the stablecoin peg. Bitcoin hit an all-time high of $73,750 in March and is up more than 300% since its late 2022 low during the “crypto winter,” when a series of high-profile bankruptcies for one-time industry giants, including the FTX exchange shattered trust.

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