Bitcoin, the most well-known cryptocurrency, recently hit a jaw-dropping high of over 100,000 Canadian dollars. But what’s fueling this surge, and why should you care? Dean Skurka, the President and CEO of WonderFi, points to some big economic shifts in Canada and the US that could keep Bitcoin on an upward trend for the next 6-24 months. Here’s what’s happening and why it matters.
Why Interest Rate Cuts Matter First, let’s break down a key term: interest rate cuts. When central banks like the Bank of Canada or the US Federal Reserve lower their interest rates, borrowing money becomes cheaper. This move can make people and businesses more willing to take loans and spend money. It’s a tool used to stimulate economic growth.
Skurka explains that recent cuts—like the Bank of Canada’s 50 basis point (0.5%) reduction and the US Federal Reserve’s ongoing cuts since September 2024—are huge for the market. When interest rates drop, investors often look for places with higher returns. That’s where Bitcoin and other digital assets come in. Lower rates encourage both retail investors (everyday people) and institutional investors (big firms) to buy or invest more in assets like Bitcoin.
The Bigger Picture: A Global Trend This isn’t just a Canada or US phenomenon; it’s happening globally. Skurka emphasizes that as more countries lower their rates, the digital asset ecosystem—the world of cryptocurrencies and blockchain technologies—will attract more attention. The idea of “cuts” signals to investors that we’re in a stable or even advantageous environment for riskier investments, like crypto.
How Long Until We See the Effects? Even though these interest rate cuts signal good news, the benefits don’t happen overnight. Skurka mentions that it usually takes 6-18 months after a cut for the full effect to hit the markets. This is why understanding these macroeconomic moves now helps you anticipate future market behaviors.
2024 US Presidential Election: A Game-Changer Another crucial point is the 2024 US Presidential election. Why does it matter for Bitcoin? Skurka says that the election outcome could influence how the crypto industry is regulated and perceived. If Donald Trump wins, the industry expects more favorable policies, while a win by Kamala Harris could create a short-term shock due to regulatory uncertainties.
However, Skurka reassures that Bitcoin’s long-term value will likely rise no matter who wins. He anticipates a shift in the regulatory climate after the election, pushed by strong lobbying efforts from the crypto industry. These changes could lead to a more crypto-friendly environment, which would further support Bitcoin’s growth.
Key Terms to Remember:
- Interest Rate Cuts: Reductions by central banks that make borrowing cheaper and encourage investment.
- Retail and Institutional Investors: Individual investors versus big firms or organizations investing money.
- Macro Factors: Large-scale economic forces that affect the market, like interest rate policies or political events.
- Regulatory Climate: The government’s rules and approach toward a specific industry.
Why Should You Care? Understanding these macro factors helps you see why Bitcoin isn’t just a speculative gamble but a part of bigger economic trends. Knowledge of how interest rate cuts and political events shape markets can make you a better, more informed investor. These trends signal where opportunities might lie and highlight why digital assets could play an even bigger role in the future.
This insight gives you a clearer picture of how economics and politics intersect with technology. If you’re interested in finance, crypto, or tech, knowing how these puzzle pieces fit together is crucial for building smart strategies and understanding where the market might be headed next.
