Key Points
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Low interest rates are a long-term tailwind that can help Bitcoin reclaim all-time highs.
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Institutional investors are loading up on Bitcoin while making it easier for their customers to buy Bitcoin.
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Governments are also getting in on the action and own more than 2% of the total Bitcoin supply.
Bitcoin (CRYPTO: BTC) investors got excited when President Donald Trump secured his second term, thinking that pro-crypto laws would result in another boom. However, the famed cryptocurrency is down by more than 10% since Trump’s inauguration. It’s also down by almost 30% since he took office, but momentum seems to be shifting in Bitcoin’s favor.
Since breaking past $90,000, is Bitcoin ready for another run? A few vital tailwinds are driving the gains and appear to be here to stay.
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Lower interest rates
Lower interest rates reduce the cost of borrowing money and make it easier for people to take out margin loans. Margin lets people build their Bitcoin positions faster and can increase the price.
The Federal Reserve is likely to keep rates steady in 2026. However, that may change once Fed Chair Powell’s term concludes in May 2026. Trump has regularly advocated for lower interest rates and may select a chair who is more eager to cut rates quickly.
Even if this scenario doesn’t play out, rates will remain low for an extended period. Inflation has been holding steady at a little below 3%, which doesn’t create the need for higher rates. That’s a good setup for an extended Bitcoin rally.
Growing institutional involvement
Retail investors drove the initial momentum for Bitcoin, with many people scoffing at the asset until it became a mainstream choice in 2017. That’s the year Bitcoin rallied from a little under $1,000 to almost $20,000 per coin.
While retail investors did a lot to move the asset higher, the heavy involvement from institutional investors has helped Bitcoin reach all-time highs. Their involvement was critical in helping Bitcoin exceed $120,000 per coin last year.
Bitcoin exchange-traded funds (ETFs), more institutions letting their investors trade crypto from their platforms, and crypto futures are some of the ways institutions have made this asset more accessible to everyday investors. This setup allows more investors to accumulate Bitcoin and ride FOMO rallies higher.
Government Bitcoin reserves
More people are viewing Bitcoin as “digital gold,” prompting some governments to build Bitcoin reserves. Global governments hold more than 2% of the total Bitcoin supply, and if they continue to buy, Bitcoin should easily hold its $90,000 price point.
If governments add to or increase their Bitcoin reserves, demand for this asset will increase. Some retail investors may load up on Bitcoin in advance and wait for governments to bid up the price.
It’s a significant long-term tailwind, especially if Bitcoin can extend its rally and reclaim all-time highs. Then, people may feel euphoric about Bitcoin again, further igniting scarcity-fueled demand.
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Marc Guberti has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.