After Trump's election, the price of Bitcoin began to soar, with a near 40% increase in the past month. This morning (12/5), it broke past $100,000, showing no obvious signs of a pullback. This has caused many people to develop a 'fear of heights' sentiment, worrying about a potential pullback. So, what are the reasons behind Bitcoin's strong performance? Will the market adjust in the future?
Where does the upward momentum for Bitcoin come from?
Bitcoin currently has a lot of favorable narratives. For example, Trump himself has always been seen by the market as a presidential candidate who is more tolerant of cryptocurrencies. He has publicly expressed his support for Bitcoin multiple times, even stating that the U.S. should consider Bitcoin as a strategic reserve asset. Recently, someone on his team even suggested that the U.S. sell gold and buy Bitcoin instead. These actions supporting Bitcoin undoubtedly bring significant favorable narratives to Bitcoin.
Driven by this favorable narrative, a large amount of capital has been continuously buying Bitcoin over the past month, which has also contributed to the rising Bitcoin price. With the launch of Bitcoin spot ETFs this year, various Bitcoin ETF-related data can also reveal the current popularity of Bitcoin among investors. From the data, in the past month, Bitcoin ETFs have only shown net outflows on 6 trading days, while the majority of other trading days have seen net inflows. It is evident that institutions are continuously buying Bitcoin.
At the same time, the Bitcoin balances in major exchanges have shown a decreasing trend, indicating that the selling pressure is not strong at the moment, and buying remains mainstream. This also determines that Bitcoin's recent selling pressure is not particularly large.
Having broken the new high, will it still fall?
So, in the current market sentiment, will Bitcoin still have a pullback? From the current data, there are no signs of a pullback for Bitcoin in the short term. However, this does not mean that the Bitcoin market can be complacent, as there are at least two potential factors of concern.
First, there is the Christmas market. It is well known that whenever developed countries in Europe and America approach the Christmas holiday, investors and institutions tend to settle their positions, thereby taking profits. Therefore, this potential factor may subject Bitcoin's price to some selling pressure in the near term.
Second, the recent surge of XRP has been excessive, and the effect of capital is significant. The price of XRP has increased more than fourfold in the past month. This was boosted by the resignation of SEC Chairman Gary Gensler shortly after Trump's successful election, which made the market believe that XRP might escape the long-standing legal troubles, thus driving up the price of XRP.
XRP itself is already a high market cap cryptocurrency. After this wave of increase, its market cap has risen to third place in the cryptocurrency market, second only to Bitcoin and Ethereum. This growth rate is quite rare for a high market cap token, creating a strong siphoning effect that caused funds that would have originally flowed into Bitcoin, Ethereum, or Solana to ultimately flow into XRP.
In the short term, the market may face seasonal selling pressure and interference from the capital effect of other high market cap cryptocurrencies (like XRP), which could result in some price volatility.
For us, at the current high price range, chasing the rise requires caution, and potential opportunities after a pullback can be monitored. Friends who entered at lower levels can also consider reducing a portion of their positions. I reduced my position by 10% at 80,000 and another 10% at 100,000 today.
From a medium to long-term perspective, the logic behind Bitcoin's rise remains solid and possesses good investment value. Under the dual influence of heightened market sentiment and external environmental changes, the future price trend of Bitcoin is likely to continue to soar.
The range of "$100,000 - $110,000" has no pressure at all, and it should quickly rise to $110,000. As it goes higher, pressure will gradually appear. At that time, it will require real capital to push in, and we will also have to see if the bears have enough fuel. Whether Bitcoin can maintain a high point and attract more capital inflow remains to be observed.
During a broad market rise, to continue climbing, there must be strong players to take over. This strong player could be Bitcoin or a MEME coin that previously led the surge. Fortunately, Bitcoin's strong character has returned. Since it can't go down, let's keep playing the music and dancing.
Today's surge has caused unusual movements in the contract positions. Accompanied by the rise, the contract positions have increased significantly, and the long-to-short ratio has decreased dramatically. It can be seen that many retail investors are opening short positions as the price rises. I don't know if you are among them, but I still advise everyone to be cautious in a bull market and not to short, as going against the trend is always exhausting. Once the entry point is not good and you get trapped, it becomes very difficult to break free; on the contrary, if you follow the trend, even if you get trapped, you can still break free.
