Three factors driving Bitcoin’s $71,000 rally and what analysts say will happen next

Bitcoin keeps climbing as more investors flock to the $1.4 trillion cryptocurrency market.

It's only 3% short of setting a new record since Bitcoin reached $71,500 on Tuesday morning.

Experts believe that we can expect even more excitement in the future.

Carlos Guzman, an analyst at the crypto market-making company GSR, shared with DL News that there are three favorable factors contributing to the recent market movement.

The first factor is the feelings surrounding the upcoming US elections, particularly regarding the chances of Donald Trump winning.

"According to Guzman, if Trump were to win, it would likely lead to a more favorable effect on prices in the near future, based on his pledges during the campaign. Additionally, the high level of optimism surrounding his campaign, as shown in prediction markets, is causing a positive response in crypto prices."

As voters prepare to head to the polls next Tuesday, Trump has positioned himself as the more favorable candidate for cryptocurrency compared to Vice President Kamala Harris.

In May, he addressed a crowd at his Mar-a-Lago home, stating that those who support cryptocurrency should make sure to vote for him. He also revealed that his campaign would be open to receiving donations in cryptocurrency.

Harris has been noticeably less vocal lately.

In September, she stated that her administration would enhance the United States' competitiveness by collaborating with businesses to promote innovative technologies such as artificial intelligence and digital assets.

Secondly, Guzman mentioned that any reduction in tensions in the Middle East is a significant factor.

"Israel's modest response to Iran last week, along with Iran's statement that it does not seek to escalate the conflict, may have eased some worries in the markets," he noted.

Investors moved away from high-risk assets, such as cryptocurrencies, as Iran launched missiles at Israel, raising concerns about escalating the regional conflict into a full-scale war. In response, on October 25, Israel targeted Iranian military sites within Iran.

Sabrina Singh, the deputy press secretary at the Pentagon, expressed on Monday that this should mark the conclusion of the back-and-forth exchanges.

Thirdly, there has been a notable increase in investments flowing into cryptocurrency exchange-traded funds (ETFs) that deal in spot trading. This trend has been particularly positive lately.

“According to Guzman, Bitcoin ETFs saw their largest net inflows in the last two weeks yesterday, which could contribute to the favorable market reaction we observed overnight.”

Over the last two weeks, Bitcoin ETFs have attracted $3 billion in investments, as reported by Matt Hougan, Chief Investment Officer of Bitwise.

"The final days of the year are going to be intense," Hougan wrote on X.

Liam Kelly serves as the DeFi Correspondent for DL News based in Berlin. If you have any information to share, feel free to reach out via email at [email protected].