Here are the make-or-break factors for bitcoin after a blistering rally so far in 2024

It’s been a momentous year for bitcoin, with big price gains to match some of the most important developments for the token in years.

It started with the Securities and Exchange Commission’s groundbreaking approval of spot bitcoin exchange-traded funds in January.

That made it easier for average investors to buy and trade the crypto, and helped mainstream the token via fund offerings from asset management titans like BlackRock and Fidelity.

In April, bitcoin underwent its scheduled “halving,” reducing the amount of tokens miners are rewarded by half. The event, which happens roughly every four years, is bullish as it cuts the supply of new tokens to the market.

The cryptocurrency has surged 57% in 2024, and is up by over 90% in the last year. Investors and analysts are still bullish, eyeing more gains in the year to come even as election uncertainty looms.

“I’m really bullish for 2025,” Matt Hougan, Chief Investment Officer at Bitwise Asset Management, told B-17. “There are all these positive trends.”

Still, other market pros told B-17 that there are some headwinds building that could cause the rally to stumble.

Here are the make-or-break factors to watch.

Central bank policy

Hougan pointed to a broad set of monetary easing cycles from central banks as a key bullish driver for bitcoin.

Central bank easing typically boosts risk assets like crypto. When interest rate volatility was high over the summer, Bitcoin slumped as investors poured into defensive areas of the market.

The Federal Reserve’s big rate cut last month fueled a bitcoin rally, and crypto experts say the broader central bank easing cycle that’s kicking off around the world should reinforce the gains.

CoinDesk Indices’ Andy Baehr says that monetary easing should fuel the cryptocurrency’s rise in the months ahead.

“This is something the market can count on for months or quarters. The mood changed right away,” Baehr said, pointing to the immediate rise in bitcoin’s price as well as an increase in other indicators of strength like rising exchange volumes.

Regulatory uncertainty

Less bullish for crypto would be a more muscular regulatory approach to the market, and uncertainty about the oversight regime is a headwind.

“The worst outcome for crypto is one that sustains uncertainty around the direction of crypto legislation and regulation,” Hougan said, adding that the election outcomes could throw a wrench into the equation.

“We have a hunch of what a Harris administration or a Trump administration would do, but we know that those promises don’t always come through, and you can have harsh results,” Hougan said, pointing to when crypto was excited for Gary Gensler to take over as SEC chair before proving strict on crypto regulation.

Hougan said, though, that he thinks bitcoin appears to be in the clear with regulators after the SEC approved the spot ETFs.

The presidential election

The US presidential election also remains top of mind for crypto investors.

While both Trump and Harris are seen as pro-crypto, it’s been Trump who has embraced the market publicly in recent months, speaking at events and even launching his own NFTs. This has led the market to believe he’d be the one to truly allow it to flourish and bitcoin has rallied as Trump’s odds of winning the election have risen.

A Trump win could shoot bitcoin to $125,000 by the end of the year, a jump of over 80% from Friday’s prices, according to Standard Charter analyst Geoff Kendrick.

But even if odds shift in favor of Vice President Kamala Harris, bitcoin will likely still rally, Hougan said.

He says a Trump win would be an accelerant for crypto in the few months after the election, but bitcoin will likely do well in the long term regardless, as Harris appears to be friendlier to crypto than President Joe Biden.

“Two years ago, crypto was talking about Sam Bankman Fried and the biggest financial crime of all time, and crypto was completely toxic. Today, both presidential campaigns are posturing in positive ways toward the crypto industry,” Hougan said.

After the election, bitcoin’s path looks less clear.

As markets fixate on the result of the November contest, there’s no clear catalyst for further gains after that.

“Sharks need to swim to survive. If they stop they will die,” Hougan said, adding, “Bitcoin is sort of like that. It is, in the end, a narrative- and growth-focused entity.”

He says, though, that the narrative could point toward greater institutional adoption, or toward more potentially real-world applications for crypto.

Spot ETFs will gain momentum

Among the bullish drivers, the spot ETFs that drove a rally earlier this year will likely still have a positive impact.

“I think Bitcoin ETF flows will accelerate in Q4 and then accelerate again in 2025. And I don’t think that’s priced into the market or expected,” Hougan said.

Baehr said the rising prominence of bitcoin ETFs and their backing from firms like BlackRock will help the crypto push further into the mainstream.

“I think that the asset class now is able to participate in more serious conversations, and so the price of bitcoin is just going to enjoy that universal expansion and that network enrichment,” Baehr said.