Bitcoin (BTC) surged past $66,000 on Sept. 27 as New York opened for trading, reaching a two-month high to record its best September performance on record.

The rally comes amid economic stimulus measures in China and the US Federal Reserve policy decision to cut interest rates, which have helped sustain recent market optimism. The surge is also driven by sustained institutional demand for spot Bitcoin ETFs.

According to CryptoSlate data, Bitcoin was trading at $66,200 as of press time after bears failed to pull the price back to lower levels immediately after the surge. However, the ensuing trading hours have seen subdued momentum, with a pullback to retest support at $65,000 likely in the coming hours.

Sustained demand

Institutional demand played a significant role in Bitcoin’s latest rally, with major asset managers like BlackRock and Fidelity Investments recording significant increases in their holdings following the rate cuts.

Spot Bitcoin ETFs saw inflows of $365 million this week, the highest in over two months, indicating a sustained appetite from investors seeking exposure to the digital asset.

The demand for Bitcoin ETFs has surged as investors seek alternatives to traditional assets amidst economic uncertainty. Many institutions are positioning themselves ahead of potential Federal Reserve interest rate cuts expected later this year.

Several other institutional players have followed suit, with hedge funds and pension funds increasing their allocations to Bitcoin amid a broader search for yield and diversification. The appeal of Bitcoin as a store of value has strengthened as inflationary concerns grow and traditional assets such as bonds deliver lower returns.

The upward pressure on Bitcoin’s price has also been supported by developments in China, where a wave of economic stimulus measures has boosted confidence in global markets. The Shanghai Composite Index recorded its best week since 2008, providing further momentum for Bitcoin’s rally.

The digital asset has mirrored these gains, rising over 3% week-to-date, as capital flows from both institutional investors and favorable macroeconomic conditions continue to push its value higher.

Optimism despite uncertainty

As traders speculate on the possibility of another Fed rate cut in November, optimism has grown across global markets, with the S&P 500 reaching new highs alongside Bitcoin’s rise.

The CME Group’s FedWatch Tool places the odds of another 50-basis-point cut at 52%, boosting hopes of further liquidity in the market. Lower interest rates are seen as favorable for Bitcoin and other risk assets, as they reduce the opportunity cost of holding non-yielding assets and inject more liquidity into financial markets.

With institutional demand remaining robust and macroeconomic conditions continuing to evolve in favor of risk assets, Bitcoin’s strong September performance could pave the way for further gains in October, a month historically positive for the crypto market. Analysts remain bullish, with some pointing to familiar patterns of strong price action following periods of institutional accumulation.

As economic uncertainty persists and both central bank policies and global financial markets remain in flux, Bitcoin’s recent price movement highlights its evolving role as a key player in the financial landscape.

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