Market may consolidate but structural demand supports further gains
Bitcoin hit a record high on Thursday, surging past $124,000 for the first time before easing slightly to $123,868. Ethereum also climbed sharply, trading near $4,717, its highest level since 2021.
The rally reflects a mix of strong institutional demand, favourable macro conditions, and growing expectations of easier US monetary policy.
Himanshu Maradiya, Founder and Chairman of CIFDAQ, explained the drivers behind the rally.
“Bitcoin surged past $124,000 for the first time, setting a new all-time high before easing to $123,868. The rally was fueled by strong institutional demand and growing expectations of a September interest rate cut, with CME FedWatch now showing a 93.7% probability. Softer-than-expected US CPI data at 2.7% y/y boosted optimism, though a core inflation uptick to 3.1% could keep the Fed cautious,” he said.
“Ethereum also climbed near its 2021 peak, trading at $4,717. Institutional inflows remain a key driver. BTC ETFs added over $3.6 billion in the past month, while corporate and sovereign treasuries now hold 3.64 million BTC, or 17% of supply,” he noted.
“The markets may experience consolidation between $120K and $125K, but strong structural demand and limited supply will support further gains through the end of the year.”
Simply put, the rally has been supported by expectations of a September interest rate cut from the Federal Reserve. CME FedWatch currently shows a 93.7% probability of a cut, while softer-than-expected US CPI data at 2.7% year-on-year has boosted market optimism.
However, a rise in core inflation to 3.1%, however, could make the Fed more cautious, adding an element of uncertainty to near-term market movements.
It is worth noting that institutional adoption remains a key driver. Bitcoin ETFs added over $3.6 billion in inflows in the past month, and corporate and sovereign treasuries now hold 17% of total BTC supply. This structural demand, combined with limited supply, has created a strong foundation for further gains, even if markets consolidate between $120,000 and $125,000 in the short term.
Analysts say that regulatory clarity and increasing institutional participation are helping crypto mature as an asset class, paving the way for continued growth in 2025 and beyond.
