According to The Block; As per Geoff Kendrick, Global Head of Digital Assets Research at Standard Chartered, Bitcoin is gaining significant upward momentum and could potentially reach $73,800 in the weeks leading up to the U.S. presidential election. Several key factors, including political dynamics, ETFs inflows, and derivatives activity, are driving this rally.

Bitcoin’s Bullish Momentum Driven by Political and Market Factors

Trump’s Increasing Election Odds and Market Sentiment

  • Polymarket now places Donald Trump's winning probability at 56.3%, with a 70% chance of a Republican sweep if he wins.

  • A Republican-controlled government could create favorable conditions for risk assets like Bitcoin, boosting investor optimism.

Yield Curve Shift Sparks Bitcoin Demand

  • The steepening of the 2s10s yield curve—the gap between 2-year and 10-year U.S. Treasury yields—is signaling higher market volatility.

  • The shift, triggered by strong U.S. CPI data, is driving investors toward alternative assets like Bitcoin as a hedge against potential interest rate hikes.

Institutional Demand Drives Bitcoin ETFs and Options Activity

Record Inflows into Spot Bitcoin ETFs

  • Data from SoSoValue reveals that U.S. spot Bitcoin ETFs saw $555.8 million in net inflows on Oct. 15, the highest since June.

  • Out of 12 ETFs, 10 recorded net inflows, signaling increased institutional interest and market confidence.

Derivatives Activity on the Rise

  • The Deribit exchange saw a spike in open interest for Bitcoin call options with a strike price of $80,000 expiring on Dec. 27.

  • Another 1,500 BTC was added to open interest at this strike price, suggesting institutional investors are positioning for a significant upside move.

MicroStrategy's Role in Bitcoin Adoption

  • MicroStrategy's stock has outperformed Bitcoin, with its NAV multiple hitting a three-year high, signaling increasing market confidence in the company’s digital asset strategy.

  • A key development was BNY Mellon’s exemption from SAB 121, a U.S. accounting rule, potentially allowing MicroStrategy to engage in Bitcoin lending activities.

  • Kendrick noted that this positions MicroStrategy as a 'Bitcoin bank,' capable of creating capital market instruments across equity, convertibles, and fixed income.

Outlook: Bitcoin Positioned for Long-Term Growth

While the election outcome remains uncertain, Kendrick emphasized that the trend toward digital asset adoption will continue regardless of political developments. The growing legitimacy of spot Bitcoin ETFs and increasing institutional participation provide strong tailwinds for Bitcoin’s long-term growth.

Even if Trump does not secure victory, the momentum in Bitcoin adoption and its integration into traditional financial markets will remain intact, Kendrick concluded.

Bitcoin on Track for Pre-Election Rally

With favorable political developments, ETF inflows, and derivatives activity, Bitcoin is positioned to test its all-time high of $73,800 in the coming weeks. As investors continue to shift into digital assets, the market is showing strong signs of institutional confidence that could fuel further growth leading into 2024.

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