Bitcoin Soars to New All-Time High, $90,000 in Sight?

Bitcoin Soars to New All-Time High, $90,000 in Sight?Less than a week after the election, Bitcoin's price has once again hit a new all-time high. Early Tuesday morning Beijing time, Bitcoin reached a peak of $89,253, the highest point in its history

Bitcoin Soars to New All-Time High, $90,000 in Sight?

Less than a week after the election, Bitcoin's price has once again hit a new all-time high. Early Tuesday morning Beijing time, Bitcoin reached a peak of $89,253, the highest point in its history. It retreated slightly in the afternoon, trading at $89,681.5 per coin as of 3:21 PM. Bitcoin had only crossed the $80,000 mark on Sunday evening, and in less than two days, it is approaching the $90,000 target price. Over the past week, Bitcoin has surged 29.66%. Year-to-date, Bitcoin has skyrocketed 108.03%.

"Bitcoin leader" MicroStrategy has been aggressively accumulating Bitcoin. On Monday, the company announced that it had purchased approximately 27,200 Bitcoins for around $2.03 billion between October 31 and November 10, its largest purchase since it began acquiring digital assets over four years ago. With this latest acquisition, MicroStrategy's Bitcoin holdings have a market value of approximately $24 billion. The surge in Bitcoin has also propelled MicroStrategy's stock price, which soared 25.73% on Monday to hit an all-time high of $340.0. Since August 2020, MicroStrategy's share price has climbed over 2,500%, while Bitcoin has risen about 660% in the same period.

A Historic Breakthrough: Bitcoin Spot ETF Assets Surge

Bitcoin has been hitting new all-time highs every week. On Wednesday last week, Bitcoin first surpassed the $75,000 mark after Trump secured victory in the election. On Thursday, after the Fed announced a 25-basis point rate cut, Bitcoin continued its upward trend, breaking through the $80,000 mark on Sunday. Now, Bitcoin, having already breached $89,000, is striving to break through the key resistance level of $90,000. Market funds are heavily investing in Bitcoin.

On January 10th, the first 11 US Bitcoin spot ETFs were launched, with a combined asset size of approximately $28 billion. As of yesterday, this size has almost tripled to $82 billion. iShares Bitcoin Trust (IBIT), a Bitcoin ETF managed by BlackRock, is the largest spot fund in the market. After its trading volume hit a record high of $4.1 billion on Wednesday last week, it received another net inflow of $1.1 billion the next day, setting a new record for single-day inflows. Recently, IBIT's assets under management surpassed those of the iShares Gold Trust (IAU) for the first time, reflecting a significant shift of capital into Bitcoin, while gold appears to be comparatively "neglected."

This trend is also reflected in price movements. While Bitcoin has surged, gold has plummeted. On the day of the election results, gold prices saw their biggest drop in over two years, falling 3.93% over the past week. Noelle Acheson, a crypto macro analyst, believes that the Trump administration's introduction of clearer cryptocurrency regulations may cause some investors to favor Bitcoin over gold.

Why is the Bullish Sentiment for Bitcoin Exceeding Traditional Investments like Gold?

HashKey Group's Chief Analyst, Ding Zhao Fei, told 21st Century Business Herald that Trump is the most pro-Bitcoin president to date. During his campaign, he also promised policies such as including Bitcoin in government reserves, establishing a presidential advisory council, and replacing the SEC chairman. The gradual implementation of these favorable measures would create a more favorable market environment for Bitcoin, expanding its upward potential.

According to recent media reports, in order to fulfill his election promises and make the United States the "global cryptocurrency capital," Trump is seeking individuals who are friendly towards cryptocurrencies to fill key positions in financial regulatory agencies like the Securities and Exchange Commission. Sources told reporters that Trump's aides have considered current regulators, former federal officials, and financial industry executives for key leadership positions, many of whom have publicly expressed their support for cryptocurrencies.

From a macro perspective, interest rate cuts have also injected more liquidity into the market. Ding Zhao Fei stated that the Fed's decision to lower its benchmark interest rate by 25 basis points last week has provided more financial foundation for high-risk assets like Bitcoin, driving up their prices. Additionally, the low-interest rate environment encourages investors to seek high-yield investment avenues, increasing demand for cryptocurrencies.

While Trump's victory was the primary catalyst for the recent surge in the crypto market, Elon Musk's contributions should not be overlooked. Ding Zhao Fei pointed out that Musk has consistently supported cryptocurrencies like Bitcoin and Dogecoin. Tesla began accepting Bitcoin payments in 2020, and with Trump's election, Musk, as a key campaign partner and an early "Bitcoin influencer," is poised to lead the market forward.

$200,000 Target Price, Will It Become Reality?

The booming derivatives market indicates that the market is betting heavily on continued Bitcoin price increases. Coinglass data shows that on Tuesday morning, the open interest for Bitcoin call options with a strike price of $80,000 had reached $1.88 billion, while the open interest for call options with a strike price of $100,000 reached $1.71 billion, demonstrating a near-equal bet on the $100,000 target price compared to $80,000.

Institutional predictions are also generally optimistic. Geoff Kendrick, Global Head of Digital Asset Research at Standard Chartered Bank, believes that cryptocurrency market capitalization could triple by the end of 2026 if the Republicans sweep the House and Senate. Tom Lee, co-founder of Fundstrat, believes Bitcoin could reach $100,000 this year. Geoff Kendrick previously predicted that Bitcoin could hit $125,000 by the end of this year after Trump's victory. Bernstein has made an even bolder prediction, stating that the Bitcoin price will reach $200,000 by 2025 and $1 million within 10 years.

The type of capital entering the market also indicates a long-term bullish sentiment. Cameron Winklevoss, co-founder of Gemini, believes that the breakthrough of $80,000 for Bitcoin is primarily driven by sustained institutional demand through spot Bitcoin ETFs, rather than retail investor activity. This "sticky" demand from institutional investors is a sign of long-term bullish sentiment, and the current market cycle is still in its early stages.

Wang Yingbo, a digital economy scholar at the Shanghai Academy of Social Sciences, told 21st Century Business Herald that the long-term core driving force behind the surge in Bitcoin is the shift from carbon-based to silicon-based digitalization, which translates to the rapid growth of the digital economy, with the Nasdaq hitting new highs consistently. While the short-term factor driving the price increase is Trump's victory in the US election, a more fundamental consideration is that the United States will further relax regulations on digital economy companies, accelerating the deployment of digital technologies like artificial intelligence. Bitcoin, as a digital asset, will soar alongside tech giants. Tesla, whose market capitalization recently surpassed $1 trillion, is also expected to continue its upward trajectory. We can expect to see tech companies with market capitalizations of $5 trillion or even $10 trillion emerging in the near future.

Enter Cautiously, Beware of Correction Risk

However, from a medium to short-term perspective, investors need to be aware of correction risks. Wang Yingbo stated that the Bitcoin rally could continue until the next Trump administration takes office. If policies fall short of expectations, a correction may occur.

In Ding Zhao Fei's view, Bitcoin's climb to $80,000 suggests that there's still room for upside potential. However, uncertainty always exists in financial markets, and investors need to monitor the implementation progress of policies and macroeconomic indicators like inflation trends. After Trump officially takes office, the market will observe the implementation of his policies. Policy changes could significantly impact market sentiment and investment direction. Additionally, there's a potential risk of inflation rebounding in the United States, which could also affect Bitcoin's price performance.

Regarding concerns about whether Bitcoin is overvalued, Wang Yingbo believes that Bitcoin does not have a value center. Its core lies in algorithmic consensus. With accelerating technological advancements, monetary policy should increasingly lean towards neutrality, returning to its basic role as a medium of exchange. This is because efficiency improvements driven by technological progress can fully compensate for the role of traditional monetary policy, with fewer side effects. Therefore, even if Bitcoin experiences a temporary correction, it won't reverse the trend of comprehensive digitalization of the economy.

For investors, Bitcoin has been hitting new highs recently, and it's crucial to enter cautiously. Ding Zhao Fei reminds investors that if they are highly sensitive to market fluctuations or if their current portfolio already includes a significant proportion of high-risk assets, they may need to carefully consider whether to increase their positions at these high levels. Additionally, if they lack a deep understanding of the cryptocurrency market or have limited risk tolerance, it's wise to avoid entering the market at peak prices.

In terms of investment strategy, Ding Zhao Fei recommends focusing on