Bitcoin's price reached a historic high under the dual influence of Trump's election and the Federal Reserve's policy outlook. Behind this wave of increase, there are not only policy expectations driving it but also exposing the speculative characteristics of the market, with volatility significantly increasing after a sharp rise. Optimistic market participants are still closely watching this rally, especially whether it can push Bitcoin's price beyond the $100,000 mark.
Irresistible
The recent rise in Bitcoin began with the U.S. election on November 5, 2024, and on November 13 it briefly broke through $93,400, rising about 35% from before the election. According to Santiment data, investors realized nearly $8 billion in profits (approximately 58 billion yuan) within 48 hours from November 13 to 15, marking the highest level since October 9.
The factors driving this wave of increase mainly come from two aspects: first, U.S. inflation data met analysts' expectations, prompting traders to increase their bets on a 25 basis point rate cut by the Federal Reserve in December; second, Trump promised to introduce a series of policies favorable to the development of cryptocurrencies during his campaign, 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 contracts for Bitcoin futures at the Chicago Mercantile Exchange reached a historic high of 35,973 contracts in November, with a nominal value of $13.9 billion.
Since the election day on November 5, the U.S. spot Bitcoin ETF has seen a net inflow of $4.7 billion, and the total assets of the Bitcoin ETFs issued by 12 institutions have reached approximately $94 billion.
Among them, BlackRock's iShares Bitcoin Trust has reached nearly $43 billion, becoming the world's largest Bitcoin fund, showing that institutional investors are actively positioning themselves in this emerging asset class.
However, the sustainability of this rally is affected by short-term shocks.
On November 15, after Federal Reserve Chairman Powell stated that there was no rush to cut interest rates, Bitcoin's price fell below $87,000, retreating about $6,500 from the historical high on November 13. According to Julio Moreno, head of research at CryptoQuant, large miners realized significant profits by transferring about 25,000 Bitcoins. Meanwhile, data from the derivatives market also shows signs of cooling, with K33 Research reporting a decrease in the premium of CME Bitcoin futures relative to the spot market, with these futures contracts primarily used by U.S. institutional investors to trade positions in original cryptocurrencies.
Vetle Lunde, head of research at K33, stated that the narrowing of futures premiums may indicate that market risk appetite is cooling.
This view is also echoed by James Davies, CEO of the on-chain futures and options trading platform Crypto Valley Exchange. Davies pointed out that the current market is primarily speculative trading, and significant volatility is expected before U.S. policies become clear. He particularly reminds investors to pay attention to the fluctuations around the $90,000 key level to see if it will become a resistance level. Currently, Bitcoin's price has returned above $91,000.
Is $100,000 possible? Optimistic traders are still actively bullish.
In the options market, according to Jake Ostrovskis, an over-the-counter trader at crypto market maker Wintermute, there are currently options contracts worth $850 million betting that Bitcoin will break $100,000 before the expiration date on December 27. Data from Deribit exchange shows that call options with a $100,000 strike price are the most concentrated, reflecting strong market expectations for breaking through this milestone.
The policy commitments from Trump's camp have become an important driving force behind this market trend.
The cryptocurrency industry donated $170 million to super PACs supporting congressional candidates seen as allies of the election, betting on a wave of deregulation and industry-friendly policies.
Trump promised to create a Bitcoin reserve and stated that he would fire Gary Gensler, the chairman of the SEC, who takes a tough regulatory stance.
Matt Hougan, Chief Investment Officer of Bitwise, stated that for Bitcoin to break through the $100,000 mark, more demand support is needed from investors and the Federal Reserve. He believes that if Bitcoin eats into gold's market share to a certain extent, and if governments hold it as a reserve fund, the price of Bitcoin could reach $500,000.
It is noteworthy that the enthusiasm of individual investors is also rising. Google search data shows that the search volume related to Bitcoin has climbed back to levels seen before the 2022 industry crisis. Small-cap tokens have also seen significant increases, with Dogecoin more than doubling since the U.S. election on November 5. This reflects the warming of speculative sentiment but also exposes the market's vulnerability. From a technical perspective, the 14-week relative strength index (RSI) shows that Bitcoin has entered the overbought zone, suggesting a possible pullback. Analysts point out that if the daily closing price falls below $73,777, the current bullish argument will be invalidated.
Market participants generally believe that significant volatility is expected before U.S. policies become clear.
On November 15, the performance of these small-cap tokens showed divergence, reflecting a decrease in market risk appetite after Powell's remarks on interest rate cuts. This market response indicates that the cryptocurrency market remains highly sensitive to changes in macroeconomic policy and the regulatory environment.
Subsequent influencing factors
As the market size expands, Bitcoin price volatility may become more intense, and investors need to closely monitor various risk factors.
Institutions believe that multiple factors will affect the sustainability of this Bitcoin rally.
First of all, it depends on the direction of the Federal Reserve's monetary policy. If inflation rises again and leads to a tightening of monetary policy, it may pose a resistance to Bitcoin. Secondly, it is about the implementation of specific policies by the Trump administration, including the establishment of a regulatory framework and strategic reserves. In addition, the continued participation of institutional investors will also be a key factor, as their capital flows often influence market trends.
It is important to note that changes in the supply of stablecoins have become an important market indicator. The growth of 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 is worth noting that speculative sentiment in the market may lead to sharp price fluctuations. According to data from CryptoQuant, the holdings of whales (those holding between 1,000 and 10,000 Bitcoins) have significantly increased recently, indicating that large investors are optimistic about the market outlook. However, this concentration of holdings may also bring price volatility risks.
