Bitcoin soared to record highs over the weekend as investors grew anxious about the U.S. government shutdown and declining confidence in fiat currencies.
The world’s largest cryptocurrency reached $125,689 early Sunday, surpassing its previous mid-August high and maintaining its positive trajectory heading into 2025. The milestone comes as investors reassess their traditional market and currency exposures.
Analysts argue that the government shutdown, rising inflation and widening government deficits have prompted new changes in investor behavior. As a result, there is growing interest in alternative stores of value such as Bitcoin and gold.
“Many investors treat Bitcoin like digital gold,” says Joshua Lim. Co-Head of Market at FalconX. “With growing concerns over a weaker dollar, it’s no surprise that they’re benefiting from a narrative of falling asset values.”
Economic pressures exacerbate market changes
Several factors are increasing the appetite for this safe haven. Persistent U.S. inflation, rising government debt, and uncertainty surrounding Federal Reserve policy have all undermined confidence in the stability of fiat currencies.
In emerging markets, this erosion of trust is even more pronounced, driving greater adoption of cryptocurrencies.
“Closure is more important this time.” Jeff Kendrick, Global Head of Digital Asset Research at Standard Chartered, said: “Bitcoin currently trades as part of a global risk complex, with markets treating it as a serious macro hedge. ”
‘Uptober’ trend boosts optimism
Meanwhile, October has historically been one of Bitcoin’s strongest months, a pattern known among traders as the “uptober.”
According to the data, Bitcoin has ended higher in nine of the past Octobers. This adds seasonal optimism to an already bullish setup.
Additionally, this trend, coupled with new inflows into Bitcoin-linked ETFs, is helping to strengthen the positive momentum. Similarly, the broader risk environment, including record highs in U.S. stocks and surging demand for artificial intelligence stocks, is also contributing to Bitcoin’s upward trajectory.
Gold also rose on the back of central bank buying and falling real interest rates, extending its winning streak to seven weeks.
Institutional investors and policy tailwinds
Institutional support remains another pillar of Bitcoin’s rise. By way of background, public companies, led by Michael Saylor’s strategy, continue to add Bitcoin to their balance sheets. Additionally, this corporate strategy, once considered risky, has since gained traction across multiple sectors.
Policy signals from the Trump administration, particularly regarding digital asset regulation and taxation, are also encouraging investment in the cryptocurrency space as a whole.
JP Morgan predicts Bitcoin price to reach $165,000
Earlier this month, JPMorgan analysts predicted that Bitcoin could rise to around $165,000. This estimate assumes that volatility relative to gold continues to decline.
The bank’s team, led by Nikolaos Panigirtzoglou, observed that Bitcoin’s volatility-to-gold ratio was below 2.0. Therefore, the risk-adjusted profile of the asset is gradually improving.
Based on this ratio, JPMorgan estimates that Bitcoin’s current market cap of $2.3 trillion could increase by about 42%. This growth would match the $6 trillion in private investment currently held in gold through ETFs, bullion and coins.
The report notes that Bitcoin is now significantly undervalued compared to being overvalued at the end of 2024, suggesting strong upside potential if macro trends continue.
At the time of writing, Bitcoin is trading around $124,866, up 1.2% in the past 24 hours and more than 30% year-to-date. The company’s market capitalization now exceeds $2.48 trillion, strengthening its dominance over the broader crypto market.
