Author: 636Marx
Possibly half of the people in the global crypto world may have explained the surge in Bitcoin as a result of Trump's victory. However, as I emphasized in my previous article, sustained incremental capital is what is needed for the stable growth of digital currencies. Nowadays, there is a voice emerging from the West - the crisis of American banks is also the fundamental reason for the rise of Bitcoin.
As Bitcoin approaches the $90,000 mark, it has entered a historic territory. And this surge, I believe, is driven by the supply constraints after the halving, the increased institutional interest, and the recent economic developments. These factors have intertwined to make Bitcoin transcend a purely speculative asset - it is increasingly seen as a tool to hedge against the uncertainty of the traditional market.
Analysis of the 30% weekly increase in Bitcoin
In 2023, Biden stepped in to resolve the collapse of Silicon Valley Bank, and promised to hold the responsible parties accountable. With the bankruptcy of major players like Silicon Valley Bank and Silvergate Bank, Bitcoin has regained people's attention. The periodic financial crises in the capital world have highlighted the fragility within the banking system, and underscored the value of Bitcoin as a decentralized asset. Of course, the surge in Bitcoin is not only attributed to the past banking troubles, but also stems from the recent changes in US politics and economy.
Trump's re-election, economic policy and market impact
The result of the 2024 US presidential election is Donald Trump's re-election, which has sparked optimism in the crypto market. Trump's proposed economic policies, including potential regulatory reforms favorable to the crypto and innovation industries, may drive capital flows towards alternative assets like Bitcoin.
The traditional finance industry in the US is now facing an even greater crisis, with over 60 US banks heavily indebted and facing bankruptcy. Arthur Hayes, the former CEO of BitMEX, hinted that quantitative easing policies could push Bitcoin's price to unprecedented levels. The Trump administration's continuation of the Biden administration's credit expansion policies may drive public money towards Bitcoin, pushing it to $500,000. If Bitcoin is directly used to replace quantitative easing, it could directly break through $1 million.
Because, to solve the bank's problem, is to deposit more US dollars into the bank! To let Bitcoin solve the problem, is to deposit US dollars into Bitcoin.
Ethereum ETF inflows hit a new high, will ETH follow BTC?
The second largest digital currency, Ethereum, has also attracted the interest of institutional investors, especially after the debut of the Ethereum ETF. The latest data shows record-breaking capital inflows, and this capital injection may mark ETH's return to an upward trajectory. Particularly towards the end of this year, the regulations around the Ethereum ETF are likely to become more clear.
The role of institutional capital inflows into Ethereum ETF
The Ethereum ETF has attracted a record-breaking $295 million in inflows, surpassing the previous high in July. Fidelity's FETH attracted $115.5 million in capital inflows, BlackRock's ETHA also showed strong interest, and even Grayscale, an institution focused on Bitcoin ETF, and Bitwise Ethereum Trust saw $63.3 million in inflows. Why are institutions increasingly interested in Ethereum? Because it has matured, going beyond its utility in DeFi and Non-Fungible Tokens, to become a potential investment-grade asset.
How are Ethereum-based Altcoins performing?
While Bitcoin has been grabbing the headlines, Altcoins like SHIB, which are based on Ethereum's ERC-20 standard, have surged 67% in the past week. One whale investor purchased 15.28 trillion SHIB tokens for $3,800 in 2020. This investor recently sold 1 billion SHIB tokens, making a profit of $2.85 million, with a total gain of $123 million, and still holds $75.2 million worth of SHIB.
Author's summary on Ethereum
In the past week, Ethereum's price has risen 38%, driven by the positive sentiment after the election and the broad crypto market rebound. If the demand for Ethereum ETFs remains high, the influx of liquidity and potential supply constraints could push ETH to new highs. The author believes that progress in Ethereum ETF regulations may further drive capital inflows, attracting investors who may have previously focused only on Bitcoin.
For investors, the path forward depends on understanding the unique market dynamics: Bitcoin's scarcity model, the community-driven volatility of Altcoins, and Ethereum's utility in DeFi and institutional portfolios. The next few months could be crucial for these three crypto assets, as time is the only true test of the market!
