Article by Tuo Luo Finance
From $70,000 to $90,000, it only took Bitcoin one week. Just this morning, Bitcoin hit a new high, rising all the way to break through the $90,000 mark, reaching a high of over $93,000, just one step away from the $100,000 predicted by analysts.
The raging bull market is emerging, the crypto world is boiling, and the news is also burning. Can this trend continue? How far can the Trump effect go? The market is also full of different opinions.
Before the election, Bitcoin surged to $74,000, and at that time the market still had doubts, with bearish and conservative voices, but the facts have proved that the Trump effect is more worth expecting than imagined.
This morning, Bitcoin rose nearly 6% during the day, officially standing at $90,000, reaching a high of $93,462, although it later fell back to $90,000, but as of now, Bitcoin has risen more than 33% since the US election. And after breaking through $93,000, Bitcoin's market value briefly rose to $1.84 trillion, surpassing Saudi Aramco, and once rose to the 7th position among the world's mainstream assets.
The crypto market is also boiling, with the USDT market value breaking through $127.84 billion, setting a new high, and the mainstream sectors have generally risen, with new coins such as PUNT in the MEME sector continuing to rise. In the early morning, US stocks and crypto-related concept stocks collectively rose, with MicroStrategy up more than 4%, Coinbase up 3.7%, and Riot Blockchain up 2%, while the crypto sector in the Hong Kong stock market also continued to rise, with Huobi Tech up more than 10%.
The same volatility brings the same recipe for liquidation. Coinglass data shows that as of this morning, the 24-hour crypto market had a total of $659 million in contract liquidations, of which $374 million were long liquidations and $284 million were short liquidations. BTC had a total of $161 million in liquidations, and ETH had $87.14 million in liquidations.
As for the reasons for the rise, the Trump agenda and the Federal Reserve's policy outlook are the main positive factors, but on the other hand, the trend of large institutions becoming bullish and the nationalization of reserves have also become important reasons.
From the Federal Reserve's perspective, after the 25BP rate cut in November, lowering the federal funds rate to 4.5%-4.75%, the market is generally cautious about further rate cuts, especially given the obvious inflationary risks in Trump's policy ideas. But the CPI data released yesterday made rate cuts more feasible. The data released on Wednesday showed that the US CPI rose 2.6% year-on-year in October and 0.2% month-on-month; the core CPI (excluding volatile factors such as energy and food) rose 3.3% year-on-year and 0.3% month-on-month, indicating that the October non-farm payrolls were disrupted by hurricanes but in line with expected inflation.
Against this backdrop, traders have increased their bets on the Federal Reserve cutting rates further next month. According to the CME Fed Watch, the probability of the Federal Reserve keeping the current rate unchanged in December is 17.5%, and the probability of a cumulative 25 basis point rate cut is 82.5%. The probability of keeping the current rate unchanged in January next year is 11.9%, the probability of a cumulative 25 basis point rate cut is 61.7%, and the probability of a cumulative 50 basis point rate cut is 26.5%.
The loose environment seems to be able to continue, and the prices of risky assets are pushed up accordingly. But what is more noteworthy is that the current rise in the crypto market is undoubtedly highly dependent on the expected regulatory benefits brought by Trump. The new administration is just getting started, and Trump has already begun to update his post-inauguration agenda and personnel changes.
As president, Trump needs to nominate 15 cabinet members, and those highly related to crypto are undoubtedly Musk and Robert Kennedy Jr. Although the latter has not yet taken office, the boots of the Government Efficiency Department have already fallen. Trump announced that Musk and Vivek Ramaswamy will jointly lead the newly established "Government Efficiency Department", and stated that the department will pave the way for dismantling the government bureaucracy, reducing redundant regulatory rules and wasteful spending, and restructuring federal agencies.
Musk has reposted the appointment on social media, saying that the Government Efficiency Department is not a threat to democracy, but a threat to bureaucracy. The efficiency of the Government Efficiency Department is also lightning fast, as the official X account of the Government Efficiency Department has already gone online today, and Musk's support for crypto is no less, as he not only released a LOGO with the DOGE logo, but also @DOGE on the official account, which also added fuel to the DOGE community.
On the SEC side, which the market is most concerned about, from a regulatory perspective, the president cannot remove Gensler from the commission without a legitimate reason, and Gensler himself also seems to have no intention of resigning. But for the Senate candidates, Trump has made some hints, saying he will bypass the Senate's confirmation process to appoint his government members, and if this statement is true, the probability of Gensler's position being unsecured will be greatly increased. On the other hand, the Senate Majority Leader next year will be Senator John Thune, who supports crypto legislation, which has laid a solid foundation for a positive policy direction.
Although from the agenda Trump has currently released, the first day's work will start with the relatively easy-to-implement large-scale deportation of illegal immigrants residing in the US, and crypto is not on the list, but with the continued addition of pro-crypto members to the ruling party, the long-term certainty of positive factors is clearly visible, for example, the legal counsel of Ripple, which has been heavily impacted by regulation, believes that the new government will withdraw the digital asset cases, and the market sentiment is accordingly turbulent.
Unexpectedly, large institutions are also giving real support. MicroStrategy took the lead, and on the evening of November 11, MicroStrategy announced that it had purchased 27,200 Bitcoins between October 31 and November 10, at a cost of about $2.03 billion, with an average purchase price of about $74,463 per Bitcoin. The funds for this purchase came from the company's ATM stock sales. Currently, MicroStrategy's total holdings have reached 279,420 Bitcoins, with a total purchase cost of about $11.9 billion and an average purchase price of about $42,692 per Bitcoin.
Wall Street is not to be outdone either, as after the US election, the net inflows of Bitcoin ETFs and Ethereum ETFs have soared. The US Bitcoin spot ETF has had net inflows for 6 consecutive days, with a total inflow of $4.705 billion and a total asset management scale of $56.475 billion and a total market value of $95.688 billion. The Ethereum spot ETF is slightly inferior, but has also achieved a net inflow of over $759 million in the past 6 days.
It is clear that institutions are showing a bullish sentiment on Bitcoin, to the extent that they are making large-scale purchases at what can currently be considered high prices, and it is worth mentioning that the large-scale purchases by institutions have also provided price support for Bitcoin. Analysts also point out that the current cost basis of new investors or short-term investors is around $66,800.
In addition, the Bitcoin US reserve asset proposed by Trump has been gradually implemented in other countries. The pioneering El Salvador and Bhutan have already reaped considerable benefits, and taking Bhutan as an example, the government of the Kingdom of Bhutan, with a population of less than 800,000, holds 12,576 Bitcoins, worth over $1.1 billion, making it the fourth largest government holder of Bitcoins in the world, with the total value of its Bitcoins exceeding 25% of the country's total GDP. Parliamentarians in Venezuela and Germany have also proposed the inclusion of Bitcoin in the national reserve. And recently, Bitcoin Magazine CEO David Bailey disclosed on social media that at least one sovereign state is actively acquiring Bitcoins and has already ranked among the top five holders. The sovereign state has not yet been revealed, but the market widely speculates that it is the cash-rich Qatar and Saudi Arabia, as relatively economically backward regions are unable to support such a large amount of funds at the current price.
With all these positive factors, it is not surprising that Bitcoin is advancing rapidly. In the bull market, any bullish factors can drive its continuous rise, and the decline is also the same. But it is evident that Trump is still the main driver of this bull market, so his subsequent policies will be closely watched, which also brings uncertainty to the market.
Although he has already controlled Congress, after taking office, Trump's top priority will inevitably be economic and fiscal policies, and the priority of the cryptocurrency industry will continue to be postponed. The more direct one is the dismissal of the SEC chairman. Trump has mentioned that he will dismiss Gensler after taking office and will also set up a presidential advisory committee on Bitcoin and cryptocurrencies. This action may be a direct short-term indicator that can be observed quickly after January 20.
As for the highly concerned US reserve asset, it is just an ideal, not a reality. On the one hand, the high volatility of Bitcoin does not meet the principle of strategic reserve; on the other hand, in terms of implementation, the inclusion of Bitcoin in the national reserve still faces legal, security and traditional institutional obstacles. At the legal level, the regulatory regulations of Bitcoin are not yet clear, and there will be major changes in the existing regulations, whether in classification, custody or taxation, and there may even be security risks. Even if the regulations are improved, the erosion of the Fed's independent policy by decentralized currency will also arouse the opposition of the central bank, not to mention the adaptability issues of traditional financial institutions and other vested interests. Some people also point out that Trump is not targeting Bitcoin, but is conducting risk-free arbitrage through the coordination between stablecoins and Bitcoin, but there is no evidence yet, and it is currently only a speculation.
Of course, with so many obstacles, if it is really implemented, the benefits will also be huge. The well-known cryptocurrency investor Novogratzy predicted that if it is established, Bitcoin will soar to $500,000, and ArthurHayes even believes that it will reach $1 million in the future.
In any case, considering the current upward trend of Bitcoin, the $100,000 that many analysis agencies believe is only a step away, and Morgan Chase also stated that Bitcoin will continue to benefit from the Trump effect in the next 8 weeks, while CNBC and Copper both believe that Bitcoin will reach $100,000 before the presidential inauguration.
It is worth noting that for short-term investors, the correction after a sharp rise is normal. Glassnode's analyst believes that Bitcoin has entered the price discovery stage, and historically, this stage lasts about 22 days on average, after which there will be a major correction, during which about 5% of the circulating supply may be pushed down below the original purchase price. It has been in a high profit position for 12 consecutive days.
But based on the current situation, the expectation still has support, and the correction before Trump's formal inauguration will be relatively limited.
