This remarkable surge is mainly attributed to President-elect Trump's recent statements about establishing a 'U.S. Bitcoin Strategic Reserve.' Since Trump won the election on November 5, Bitcoin ETFs in the U.S. have attracted an astonishing net inflow of $12.2 billion, clearly reflecting the market's confidence in the new government's policy direction.
The overall warming of the cryptocurrency market
With Bitcoin's surge, the entire cryptocurrency market has also welcomed a spring. Related concept stocks in the Hong Kong stock market, such as Boya Interactive, Blueport Interactive, and Xiong'an Technology, have all seen varying degrees of increases; on the U.S. stock side, MicroStrategy announced it would join the Nasdaq-100 index, pushing its pre-market stock price up over 6%. Other cryptocurrency concept stocks such as Bakkt Holdings, Bit Digital, Jia Nan Technology, and MARA Holdings also performed impressively, each recording about a 4% increase. These signs indicate that investor interest in Bitcoin and the broader cryptocurrency sector is rapidly growing.
Outlook on Cryptocurrency Policy during the Trump Era
Trump has clearly expressed his support for the cryptocurrency industry, promising to create a friendly regulatory environment for the sector and planning to build the U.S. into the 'cryptocurrency capital.' To this end, he appointed former PayPal COO David Sacks to head the White House's Artificial Intelligence and Cryptocurrency Affairs, and nominated cryptocurrency supporter Atkins to lead the SEC. These measures have undoubtedly bolstered market confidence and become an important catalyst for the recent rise in Bitcoin prices.
It is noteworthy that, compared to the previous Biden administration, Trump's new policies appear to be more proactive, especially in encouraging innovation and development. This shift has not only driven up the price of Bitcoin but has also brought new development opportunities for the entire industry.
Trends in cryptocurrency development from an international perspective
Besides the U.S., other countries are also actively exploring the potential applications of cryptocurrencies. For example, Russian President Putin recently stated that Bitcoin might be more advantageous than traditional foreign exchange reserves and criticized the use of the dollar as a political tool in global reserve currency status. This reflects an increasing number of countries beginning to value and attempt to utilize cryptocurrencies to optimize their own financial systems.
Meanwhile, global institutional investors' interest in cryptocurrencies continues to increase, 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 skyrocketed fivefold this year, reaching a market cap of $82.8 billion, becoming the focus of market attention.
Macroeconomic background and future expectations
From a macroeconomic perspective, the core CPI in the U.S. remained flat at 3.3% year-on-year in November, and inflationary pressures have eased, providing space for future adjustments to the Federal Reserve's monetary policy. Although the market anticipates that the Fed may adopt a 'hawkish rate cut' strategy, first cutting rates by 25 basis points and then gradually slowing down, overall, a moderate rate-cutting cycle helps maintain market liquidity and supports the price trends of risk assets like Bitcoin.
CITIC Securities predicts that the Federal Reserve will implement two rate cuts before 2025, with the federal funds rate potentially falling to the range of 3.75%-4% by the end of the second quarter next year. Considering improvements in the labor market and easing core inflation pressures, this outlook is widely seen as positive news that is conducive to maintaining the current good momentum.
In summary, the strong rebound in Bitcoin prices is backed by both support from the Trump administration and the increasing awareness of cryptocurrencies by global economies, along with the combined effect of expectations for the Fed's loose monetary policy. Looking ahead, with the release of more positive news and technological advancements, Bitcoin is expected to continue challenging higher price levels, with the next important milestone possibly being the $110,000 mark. However, investors still need to treat market volatility with caution and manage risks to cope with potential uncertainties.
