Three Top Drivers for Bitcoin’s record-breaking rally
By Billy Leung, Investment Strategist at Global X ETFs
Bitcoin’s rally to US$100,000 has not happened in isolation – we see a convergence of political shifts, institutional demand, and evolving market dynamics. Since President-elect Donald Trump’s victory, Bitcoin has risen 58%, far outpacing the S&P 500’s 6% gain over the same period, as the incoming administration signals a major pivot towards supporting digital assets, not just Bitcoin.
Pro-Crypto Policy and SEC Changes
The nomination of Paul Atkins as SEC chair marks a stark shift from Gary Gensler’s tenure, which was defined by rejecting spot Bitcoin ETFs, aggressive enforcement actions like the Ripple lawsuit, and unclear classifications of crypto assets as securities or commodities. These policies stifled innovation and drove projects overseas.
Atkins has indicated plans to fast-track spot Bitcoin ETF approvals, establish clear guidelines for stablecoins, and reduce barriers for DeFi protocols. Combined with Trump’s push for a strategic Bitcoin reserve to tighten supply, this marks a pivotal moment where Bitcoin shifts from being seen as a fringe asset to a key element of U.S. economic strategy.
ETF Inflows Driving the Rally
Since the US presidential election, spot Bitcoin ETFs have seen significant inflows, contributing to their holdings of approximately 4-5% of Bitcoin’s total supply. While recent reports noted US$7.6 billion in inflows for both Bitcoin and Ethereum ETFs combined, Bitcoin-focused ETFs have been the primary beneficiaries, driving institutional demand.
These inflows have potential further boost Bitcoin’s price movements, with our estimates suggesting every US$1 billion invested can increase the price by 3-4%. ETFs continue to lower barriers to entry for mainstream investors, making Bitcoin accessible through familiar investment vehicles and fuelling its current rally.
The Growing Intersection of Politics and Crypto
The Trump administration’s embrace of Bitcoin is not just rhetoric. Campaign funding from crypto advocacy groups helped secure a pro-crypto majority in Congress, flipping key opponents like Senator Sherrod Brown. This political alignment between crypto and Washington represents a fundamental shift, moving Bitcoin from the fringes to the core of US economic strategy.
Why This Matters for Investors
Bitcoin’s surge is not just about its price hitting six figures; it is about how the asset class is becoming entrenched in traditional financial and political systems. For investors, this milestone highlights the importance of understanding macroeconomic trends and policy changes that can drive digital asset performance.
As the crypto landscape matures, Bitcoin’s ability to outperform traditional markets shows its relevance in a diversified investment strategy whether for hedging against economic uncertainty or capturing the upside of a shifting regulatory environment. Notably, Bitcoin’s correlation with the S&P 500 has risen from 0.15 over the past two years to 0.41 since US election polling night, highlighting its growing importance within broader financial markets.
