Following Trump's successful election as the next U.S. president in early November, Bitcoin's price has skyrocketed, with a nearly 40% increase in the past month. This morning (12/5), it soared past 100,000, showing no obvious signs of correction. This has caused many investors to feel a 'fear of heights' and worry about the possibility of a correction. So, what is the reason behind Bitcoin's strong performance? Will the market adjust in the future?
Where does Bitcoin's upward momentum come from?
Bitcoin currently has a lot of favorable narratives. For instance, Trump is seen by the market as a more inclusive presidential candidate for cryptocurrencies. He has publicly expressed his support for Bitcoin multiple times, even suggesting that the U.S. should regard Bitcoin as a strategic reserve asset. Recently, some of his team members even proposed that the U.S. should sell gold and buy Bitcoin instead. These actions undoubtedly bring significant positive narratives for Bitcoin.
Driven by this positive narrative, a large amount of capital has been continuously buying Bitcoin over the past month, which has also contributed to the continuous rise in Bitcoin's 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, there were only 6 trading days where Bitcoin ETFs showed a net outflow, while the majority of other trading days exhibited net inflows. It is evident that institutions are continuously buying Bitcoin.
At the same time, the Bitcoin balance stock on major exchanges has been showing a downward trend, indicating that the current selling pressure is not strong, while buying pressure remains dominant. This also determines that Bitcoin's recent selling pressure is not particularly high.
When will Bitcoin's market experience a correction?
So under the current market sentiment, will Bitcoin experience a correction? From the data available, there are currently no signs of a correction for Bitcoin in the short term. However, this does not mean that Bitcoin's market can be taken lightly, as there are at least two potential unsettling factors.
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 to realize profits. Therefore, this potential factor could subject Bitcoin's price to some selling pressure in the near term.
Second, there is the recent significant rise of XRP, with a notable capital effect. XRP's price has increased more than four times in the past month. Since the U.S. SEC Chairman Gary Gensler, who has not been very favorable towards XRP, announced his resignation shortly after Trump's election, the market believes XRP could potentially shake off the long-standing lawsuit troubles, driving up XRP's price. Furthermore, rumors circulated in the market that Elon Musk might invest in XRP, further boosting its price. Given that XRP is already a high-market-cap cryptocurrency, after this surge, its market cap has risen to third in the cryptocurrency market, only behind Bitcoin and Ethereum. Such growth speed is quite rare for a high-market-cap token, thus forming a strong siphoning effect, causing funds that should have flowed into Bitcoin, Ethereum, or Solana to ultimately flow into XRP.
Conclusion
Bitcoin's strong performance over the past month can be attributed to multiple factors, including favorable policies, capital inflows, and market sentiment. However, in the short term, the market may face seasonal selling pressure and potential disruptions from other high-market-cap cryptocurrencies (such as XRP), which could lead to some volatility in price trends.
For investors, given the current high price range, caution is needed when chasing gains, and potential opportunities after a correction can be monitored. At the same time, in the medium to long term, the logic behind Bitcoin's rise remains solid, possessing good investment value. Under the dual influence of high market sentiment and changes in the external environment, the future trend of Bitcoin will still be an exciting 'game'.
This article Bitcoin's price breaks 100,000! Will there be a correction soon? First appeared in Chain News ABMedia.
