This remarkable rally is mainly attributed to President-elect Trump's recent statement about establishing a 'U.S. Bitcoin Strategic Reserve.' Since Trump's victory on November 5, the U.S. Bitcoin ETF has attracted an astonishing net inflow of $12.2 billion, demonstrating the market's confidence in the new government's policy direction.
The overall warming of the cryptocurrency market
With the surge in Bitcoin, the entire cryptocurrency market is also experiencing a spring. Related concept stocks in the Hong Kong stock market, such as Boyaa Interactive, Blue Bay Interactive, and Xiongan Technology, have all seen varying degrees of gains; in the U.S. stock market, MicroStrategy announced it would join the Nasdaq 100 index, pushing its pre-market stock price up more than 6%. Other cryptocurrency concept stocks such as Bakkt Holdings, Bit Digital, Canaan Creative, and MARA Holdings have also performed impressively, recording approximately 4% gains. These signs indicate that investor interest in Bitcoin and the broader cryptocurrency space is rapidly growing.
Outlook on Cryptocurrency Policy during the Trump Era
Trump has clearly expressed his support for the cryptocurrency industry, committing to creating a friendly regulatory environment for the sector and planning to make the U.S. a 'cryptocurrency capital.' To this end, he appointed former PayPal COO David Sachs as head of AI and cryptocurrency affairs at the White House and nominated cryptocurrency supporter Atkins to lead the SEC. These measures have undoubtedly bolstered market confidence, serving as a key catalyst for the recent rise in Bitcoin prices.
It is worth noting that compared to the previous Biden administration, Trump's new policies appear more proactive, especially in terms of encouraging innovation and development. This shift has not only boosted the price of Bitcoin but also brought new development opportunities for the entire industry.
Development Trends of Cryptocurrencies from an International Perspective
In addition to the United States, other countries are actively exploring the application potential of cryptocurrencies. For example, Russian President Putin recently stated that Bitcoin may have advantages over traditional foreign exchange reserves, criticizing the political tool attribute of the dollar as a global reserve currency. This reflects a growing number of countries beginning to value and attempt to utilize cryptocurrencies to optimize their financial systems.
Meanwhile, global institutional investors' interest in cryptocurrencies continues to grow, as evidenced by the strong demand for Bitcoin ETFs and companies like MicroStrategy continuously increasing their Bitcoin holdings. As one of the publicly traded companies holding the most Bitcoin, MicroStrategy's stock price has already soared fivefold this year, reaching a market capitalization of $82.8 billion, becoming a focus of market attention.
Macroeconomic Background and Future Expectations
From a macroeconomic perspective, the U.S. core CPI in November remained flat at 3.3% year-on-year, easing inflationary pressures and providing room for future adjustments in the Federal Reserve's monetary policy. Although the market expects the Fed may adopt a 'hawkish rate cut' strategy, initially cutting rates by 25 basis points and then gradually slowing the pace, overall, a moderate rate cut cycle helps maintain market liquidity, thereby supporting the price trends of risk assets like Bitcoin.
CITIC Securities predicts that the Federal Reserve will cut rates twice before 2025, with the federal funds rate possibly falling to the range of 3.75%-4% by the end of next year's second quarter. Considering the improvement in the job market and the easing of core inflation pressures, this outlook is widely regarded as favorable news, conducive to maintaining the current positive momentum.
In summary, the strong rebound in Bitcoin prices is driven by both the support from the Trump administration and the increasing recognition of cryptocurrencies by global economies, combined with expectations of the Fed's loose monetary policy. Looking ahead, with more positive news releases and technological advancements, Bitcoin is expected to continue challenging higher price levels, with the next important milestone potentially being the $110,000 mark. However, investors must remain cautious of market volatility and manage risks to cope with potential uncertainties.
