Bitcoin prices hit a new all-time high under the dual impact of Trump's election and the Federal Reserve's policy outlook. Behind this round of price increases, there are both policy expectations and the speculative nature of the market, and the volatility has increased significantly after the sharp rise. Optimistic market participants are still closely watching this round of price increases, especially whether they can push the Bitcoin price to break through the $100,000 mark.
Unstoppable
The recent rise in Bitcoin prices began on November 5, 2024, the US election day, and reached a new high of $93,400 on November 13, up about 35% from before the election. According to data from Santiment, investors made nearly $8 billion in profits (about 58 billion yuan) in the 48 hours from November 13 to 15, the highest level since October 9.
The factors driving this round of increases mainly come from two aspects: first, the US inflation data is in line with analysts' expectations, prompting traders to bet more on the Fed cutting interest rates by another 25 basis points in December; second, Trump promised to introduce a series of policies favorable to the development of cryptocurrencies during the campaign (CCTV report: Bitcoin price hits a new high! Trump had promised to establish a Bitcoin strategic reserve), which greatly boosted market sentiment. The active participation of institutional investors has injected new momentum into the market.
Data shows that the number of open interest contracts for Bitcoin futures on the Chicago Mercantile Exchange reached a record high of 35,973 in November, with a notional value of $13.9 billion.
Since the election day on November 5, the US spot Bitcoin ETF has received a net inflow of $4.7 billion, and the total assets of the 12 Bitcoin ETFs issued by institutions have reached about $94 billion.
Among them, BlackRock's iShares Bitcoin Trust has reached nearly $43 billion, becoming the world's largest Bitcoin fund, showing the effectiveness of institutional investors actively deploying this emerging asset class.
However, the sustainability of this price increase is subject to short-term shocks.
On November 15, after Fed Chairman Powell said there was no need to rush to cut interest rates, Bitcoin prices fell below $87,000, down about $6,500 from the record high on November 13. According to Julio Moreno, research director at CryptoQuant, large miners realized significant profits by transferring about 25,000 Bitcoins. At the same time, data from the derivatives market also showed signs of cooling, with the K33 Research report pointing out that the premium of CME Bitcoin futures over the spot market has declined, and this futures contract is mainly used by US institutional investors to trade positions in the original cryptocurrency.
K33 Research director Vetle Lunde said the narrowing of the futures premium may indicate that the market's risk appetite is cooling.
This view is also endorsed by James Davies, CEO of the on-chain futures and options trading platform Crypto Valley Exchange. Davies pointed out that the current market is dominated by speculative trading, and before the US policy becomes clear, there is expected to be greater volatility. He particularly reminds investors to pay attention to the fluctuations around the key level of $90,000, and observe whether it will become a resistance level. Currently, the Bitcoin price has returned above $91,000.
$100,000 in sight? Optimistic traders are still actively bullish.
In the options market, according to Jake Ostrovskis, an over-the-counter trader at the cryptocurrency market maker Wintermute, there are currently $850 million in option contracts betting that Bitcoin will break through $100,000 before the December 27 expiration. Data from the Deribit exchange shows that the trading volume of call options with a strike price of $100,000 is the most concentrated, reflecting the market's strong expectation of breaking through this whole number level.
The policy commitments of the Trump camp have become an important driver of this round of market trends.
The cryptocurrency industry has donated $170 million to a super PAC supporting three congressional candidates seen as allies, and is now betting on a wave of deregulation and industry-friendly policies.
Trump promised to create a Bitcoin reserve and said he would fire SEC Chairman Gary Gensler, who has taken a tough regulatory stance.
Bitwise Chief Investment Officer Matt Hougan said that for Bitcoin to break through the $100,000 mark, it needs more demand support from investors and the Federal Reserve. He believes that if Bitcoin can erode some of gold's market share and governments hold it as a reserve fund, Bitcoin's price could reach $500,000.
It is worth noting that the enthusiasm of individual investors is also heating up. Google search data shows that Bitcoin-related searches have risen to the pre-industry crisis level of 2022. Small-cap tokens have also seen significant increases, such as Dogecoin, which has more than doubled since the US election on November 5. This reflects the rise in speculative sentiment, but also exposes the fragility of the market. From a technical perspective, the 14-week Relative Strength Index (RSI) shows that Bitcoin has entered overbought territory, suggesting a potential correction. Analysts point out that if the daily closing price falls below $73,777, the current bullish thesis will be invalidated.
Market participants generally believe that before the US policy becomes clear, there is expected to be greater volatility.
On November 15, the performance of these small-cap tokens showed divergence, reflecting that after Powell's remarks on interest rate cuts, the market's risk appetite has declined. This market reaction indicates that the cryptocurrency market remains highly sensitive to changes in macroeconomic policies and the regulatory environment.
Subsequent Influencing Factors
As the market size expands, Bitcoin price fluctuations may become more intense, and investors need to closely monitor various risk factors.
Institutions believe that multiple factors will affect the sustainability of this round of Bitcoin price increases.
First, the direction of the Federal Reserve's monetary policy, if inflation resurfaces and leads to tightening, it may pose resistance to Bitcoin. Second, the specific implementation of the Trump administration's policies, including the formulation of the regulatory framework and the establishment of the strategic reserve. In addition, the continued participation of institutional investors will also be a key factor, as their capital flows can often influence market trends.
It is worth noting that changes in stablecoin supply have become an important indicator for the market, the growth in stablecoin supply not only reflects the market's confidence in cryptocurrencies, but also provides potential support for subsequent price increases.
Data shows that since August 5, 2024, Tether has minted over 7 billion USDT on the Ethereum blockchain.
It should be noted that the market's speculative sentiment may lead to violent price fluctuations. According to CryptoQuant's data, the holdings of large investors (i.e. "whales") holding 1,000 to 10,000 Bitcoins have increased significantly recently, indicating that large investors are optimistic about the market outlook. However, this concentrated holding may also bring the risk of price volatility.
