- Since the beginning of September, Bitcoin has surged over 14%, significantly outperforming the S&P 500’s 3% rise, driven by Federal Reserve rate cuts and political support from U.S. presidential candidates.
- Strong inflows into Bitcoin ETFs and postponed Mt. Gox repayments have further bolstered its price.
Since the beginning of September, Bitcoin (BTCUSD) has soared over 14%, while the S&P 500 has only seen a modest 3% rise. Despite a rocky start to the month, economic and political factors have propelled Bitcoin’s impressive gains.
The Federal Reserve’s Influence
Both Bitcoin and traditional stocks faced initial September struggles due to economic concerns. Bitcoin, trading below $60,000 early in the month, saw its fortunes change following signals from the Federal Reserve. The Fed’s announcement of a substantial 50-basis-point rate cut on September 18 and hints at further cuts provided the needed boost for Bitcoin. Lower interest rates often lead to lower yields for Treasuries, making riskier assets like Bitcoin more appealing to investors.
However, macroeconomic uncertainty continues to cast a shadow. Any economic indicators suggesting a deviation from the Fed’s rate-cutting path or an imminent recession could potentially disrupt Bitcoin’s rally.
Political Support for Crypto
U.S. presidential elections have also influenced Bitcoin’s price movements. Both major candidates have shown some level of support for the crypto industry, which has caught investors’ attention. Vice President and Democratic presidential nominee Kamala Harris recently mentioned the need for a regulatory framework for cryptocurrency and digital assets, marking the first significant acknowledgment from her campaign. Former President Donald Trump has previously expressed support for the crypto industry.
This political support has had a tangible impact. Matt Hougan, Chief Investment Officer for Bitwise, noted that Harris’s acknowledgment, albeit limited, was enough to drive Bitcoin prices up by 5% and attract over $500 million into Bitcoin ETFs.
The Role of Bitcoin ETFs and Mt. Gox
Bitcoin’s robust performance has also been supported by strong inflows into Bitcoin exchange-traded funds (ETFs). Data from Farside Investors revealed nearly $1.2 billion in net inflows to Bitcoin ETFs over a three-day period, driving the cryptocurrency to around $68,000.
Additionally, the ongoing saga of the failed cryptocurrency exchange Mt. Gox has played a part. Recently, Mt. Gox announced that repayments to customers affected by a decade-old hack would be postponed until October 2025, alleviating fears of a sudden influx of Bitcoin into the market. Previous movements in Mt. Gox-associated Bitcoin wallets have often triggered significant price drops, so this delay has eased short-term supply concerns.
While both Bitcoin and the S&P 500 have faced their respective challenges, Bitcoin’s ability to capitalize on economic and political developments has led to its remarkable outperformance. As the cryptocurrency continues to navigate these factors, investors remain optimistic about its potential for further gains.
