With the new US presidential candidate selected, cryptocurrencies represented by Bitcoin have become one of the most eye-catching asset classes in recent times. On the night the presidential election results were announced, Bitcoin broke through the historical high of $74,000, and then continued to break through the $80,000 and $90,000 thresholds in quick succession, with funds flocking in, and the Bitcoin bull market arriving in a thunderous manner. Due to a series of positive comments and commitments made by the winning presidential candidate Trump regarding Bitcoin and the cryptocurrency industry prior to the election, the presidential election result has become the most direct catalyst for this round of price surge.
Before this round of surge, many signs had already indicated that this was a long-brewing "capital feast". In 2023, the cryptocurrency exchange Coinbase launched a non-profit political lobbying group, officially "shifting from defense to offense", exerting political influence, with the intention of steering future US policies in a direction favorable to the industry. According to statistics from The New York Times, the cryptocurrency industry has invested over $130 million through various channels in this US presidential election, and the attitude of the winning candidate Trump towards Bitcoin and the cryptocurrency industry has also undergone a 180-degree change. At the same time, institutional funds have poured in, and in just the third quarter of this year, prior to the presidential election, multiple institutions with assets over $100 billion, including Millennium, have been actively building positions in cryptocurrency assets, undoubtedly the biggest beneficiaries of this round of cryptocurrency asset surge.
A long-term participant in the cryptocurrency industry told Tencent News' Qianwang that the true cryptocurrency bull market has arrived, and in the short term, this round of surge is just making up for the value suppressed by the unfavorable regulatory environment and uncertainty in the past. In the long run, compared to the "low-end" prejudice towards cryptocurrencies in the past, with the deep participation of long-term institutional funds, Bitcoin has become a mainstream investment asset recognized by institutions and the general public, just like stocks and commodities.
However, for retail investors, the danger of Bitcoin cannot be ignored. On November 13, the day Bitcoin hit a new high, Coinglass data showed that the total amount of cryptocurrency liquidations on that day reached $847 million, with $520 million in long positions and $326 million in short positions liquidated, affecting over 250,000 people, a true double-edged sword.
The US presidential election situation drives the surge in Bitcoin
This round of Bitcoin surge is highly consistent with the dynamics of the US presidential election. In the week before the presidential election, Bitcoin hovered between $68,000 and $69,000. On the night of the US presidential election on November 5, as the prospect of Trump's victory became clearer, Bitcoin also rose sharply. On November 6, after the news of Trump's victory was finalized, Bitcoin also reached a new historical high above $74,000.
Subsequently, Bitcoin consecutively broke through the important thresholds of $75,000, $80,000, and $85,000, and after a slight correction on November 12, continued to rise, reaching a new historical high of $93,000.
Although the strong performance of Bitcoin prices in this round is astonishing, it is not entirely beyond market expectations. It can be said that this round of Bitcoin surge is closely linked to the dynamics of the US presidential election, because one of the candidates, Trump, had repeatedly made positive comments on Bitcoin and other digital cryptocurrencies, so the consensus in the market before the US presidential election was that "if Trump is elected", it would be positive for Bitcoin.
This round of surge has also brought Bitcoin's market capitalization close to $1.8 trillion, surpassing silver to become the 8th largest asset globally.
The former meme coin Dogecoin has also been sought after due to Trump's announcement after his election that Musk will lead a new government efficiency department D.O.G.E. with the same name as Dogecoin, with its market capitalization already exceeding the century-old automaker Ford.
Trump's attitude undergoes a 180-degree turnaround
The cryptocurrency digital industry deeply influences politics
As early as early 2021, Trump had stated that cryptocurrencies "seem to be more like a scam".
But with the support from the cryptocurrency industry in his campaign, Trump's affinity towards the cryptocurrency industry has become increasingly evident. In 2023, the cryptocurrency exchange Coinbase launched a non-profit organization called the Stand with Crypto Alliance, aiming to push Congress to pass legislation more favorable to the cryptocurrency industry, which is also the first independent political advocacy group representing the cryptocurrency community in the US. This means a shift from the cryptocurrency industry passively accepting regulation to actively trying to influence the political agenda, and at the same time, hundreds of millions of dollars from the industry are also intervening and influencing the political agenda through various channels. According to statistics from The New York Times, the cryptocurrency industry has invested over $130 million in the 2024 presidential election.
"What we're seeing in this rebound is more like a normalization of the proper state of the market dynamics around crypto," said Faryar Shirzad, Chief Policy Officer of Coinbase, "I think what we're seeing is a real, live demonstration of the extent to which the political headwinds we've faced over the past four years have suppressed the crypto market."
In the summer of 2024, Trump will make a high-profile appearance at the Bitcoin conference, where he will make two promises: one is to fire the chairman of the US Securities and Exchange Commission, Gary Gensler, who is seen as a thorn in the side of the cryptocurrency industry due to his tough attitude and measures towards it; the second promise is even more exaggerated, as he stated that he will establish a national-level Bitcoin reserve.
Although this proposal to establish a Bitcoin national reserve is at odds with the "decentralization" principle of Bitcoin and other cryptocurrencies, it is nonetheless having a real impact on people's confidence in cryptocurrencies, even for the staunchest believers in the cryptocurrency industry, who are willing to accept the reality that "although it goes against the core ideology, the price will still rise".
Yesha Yadav, Associate Dean of Vanderbilt Law School, said the idea of establishing a strategic reserve would "completely establish Bitcoin as an asset class of global systemic significance." He said, "This in itself represents a huge symbolic victory for the crypto industry, after all, two years ago people were still saying it was on its last legs."
Institutional funds pouring in
Alongside the shift in the political landscape, funds have also been quick to respond. According to a report by cryptocurrency research firm CoinShares, over $1.98 billion in institutional funds flowed into related digital assets after the election, with net inflows for five consecutive weeks, and a total of over $31.3 billion in institutional funds entering this space so far this year.
According to the latest quarterly holdings reports of some funds, many institutions with assets under management over $10 billion have recently increased their holdings of cryptocurrencies such as Bitcoin. For example, the large hedge fund Millennium, with over $70 billion in assets under management, increased its holdings of the Bitcoin ETF IBIT by 23.5 million shares in the third quarter, worth $850 million, and currently holds a total of $1.7 billion in digital currency ETF assets including Bitcoin and Ethereum. The European fourth-largest hedge fund, Capula, with over $30 billion in assets, holds $600 million in related assets. The well-known hedge fund manager Paul Tudor Jones' hedge fund increased its IBIT ETF holdings five-fold to 4.4 million shares in the third quarter.
Undoubtedly, these institutions that have significantly increased their holdings have reaped substantial profits recently, as the spot Bitcoin ETF has surged by over 40% since September due to the aforementioned series of factors.
The Bitcoin ETF issued by BlackRock has continued to grow its asset size over the past year, currently reaching $42.9 billion.
A recent survey by the Swiss institution Sygnum of 400 institutional investors in 27 countries showed that 57% of the participating institutions plan to increase their cryptocurrency asset positions, with 31% saying they will do so in the next quarter, 32% in the next 6 months, and a staggering 79% considering increasing their holdings within the next year.
The recognition and influx of institutions also means that Bitcoin will become one of the mainstream institutional configuration assets in the future. The aforementioned investor told Tencent News "Qianwang" that the listing of Bitcoin spot ETF is a milestone for Bitcoin's transition from wild growth to gradual healthy development. With more funds entering this field, the market depth and efficiency are improved, which is beneficial to the price discovery of this asset. The recent round of skyrocketing of Bitcoin and other cryptocurrency assets has caused a surge of market sentiment. In addition to the deep participation of institutional funds, countless retail funds have also flocked in. According to data from blockchain analysis company Chainalysis, compared with the 10 days before the election, the number of newly created personal Bitcoin wallets increased by 26% in the 10 days after the election. But just as it has happened countless times before, due to the participation of a large amount of leveraged funds, Bitcoin still faces the risk of sharp rises and falls in the short term, especially in the futures market of Bitcoin or other cryptocurrency assets, which is more likely to occur, and this will also bring the risk of huge losses to investors' accounts.
