Bitcoin Surges Past $100,000: A New Milestone for the Global Virtual Asset Market, But What's Next?

Bitcoin Surges Past $100,000: A New Milestone for the Global Virtual Asset Market, But What's Next?Bitcoin's price has skyrocketed nearly 140% year-to-date, breaching the $100,000 mark and setting a new milestone for the global virtual asset market. This significant surge is the result of multiple contributing factors

Bitcoin Surges Past $100,000: A New Milestone for the Global Virtual Asset Market, But What's Next?

Bitcoin's price has skyrocketed nearly 140% year-to-date, breaching the $100,000 mark and setting a new milestone for the global virtual asset market. This significant surge is the result of multiple contributing factors. However, Coinglass data reveals that over 210,000 traders were liquidated in the past 24 hours, with total liquidations reaching $674 million, a stark reminder that substantial risk remains despite the market's bullish momentum.

Macroeconomic Factors and Market Sentiment Fuel the Rally

Jeffrey Ding, Chief Analyst at HashKey Group, attributes Bitcoin's 2024 price surge to a confluence of factors. Firstly, a shift in market sentiment played a crucial role. After a mid-year correction in April, pent-up optimism surged, driving the market upward.

Secondly, adjustments to the Federal Reserve's monetary policy have provided a more substantial funding base for high-risk assets like Bitcoin. In November, the Fed announced a 25-basis-point cut to its benchmark interest rate, increasing market liquidity. Expectations of further rate cuts in December are also growing, with the CME Group's FedWatch tool showing a 62.4% probability of a 25-basis-point reduction. JPMorgan Chase even anticipates a possible December rate cut and an end to balance sheet reduction in Q1 2025; Goldman Sachs' chief economist, Jan Hatzius, also predicts consecutive rate cuts in December, January, and March. A lower interest rate environment incentivizes investors to seek higher-yield investments, thus boosting demand for cryptocurrencies.

Concurrently, US economic data has also supported Bitcoin's rise. While the US GDP grew by 2.8% year-over-year in Q3 2024 and 3% in Q2, private investment and residential fixed investment remain under pressure; US core PCE inflation slowed to 3.5% year-over-year in October, and personal spending and income growth also decelerated. This suggests a slowdown in US economic growth, prompting investors to seek alternative investments.

Furthermore, the anticipated impact of a Trump victory has positively influenced market sentiment, further driving Bitcoin's price upward.

The Influence of Corporate Bitcoin Hoarding

Significantly, several publicly listed US companies have integrated Bitcoin into their financial strategies, actively accumulating holdings, positively impacting its price. MicroStrategy serves as a prime example. Since allocating $250 million in idle funds to Bitcoin in August 2020, the company has repeatedly added to its holdings, becoming the world's largest publicly listed Bitcoin holder, possessing over 380,000 coins, representing 1.8% of the global supply. This significant accumulation has seen MicroStrategy's stock price soar from $12 to a high of $500, showcasing Bitcoin's investment potential.

MicroStrategy is not alone. Nasdaq-listed Anixa Biosciences (ANIX) has received board approval to purchase Bitcoin as a reserve asset. CEO Amit Kumar described this as prudent financial management aimed at enhancing shareholder value. Anixa Biosciences, focused on cancer treatment and prevention, demonstrates a strategic corporate embrace of digital assets. Hoth Therapeutics (HOTH), another US-listed biopharmaceutical company, also bought $1 million worth of Bitcoin as a reserve asset.

This trend extends beyond the US, with several Asian companies joining the Bitcoin accumulation movement. Singapore-based education software company Genius Group Limited announced a $10 million investment in 110 Bitcoins, subsequently increasing its holdings to 172.

However, not all companies opt for long-term Bitcoin holding. Meitu (01357.HK) announced the sale of all its held cryptocurrencies on December 4th, 2024, realizing profits of approximately $79.63 million (approximately CNY 571 million). This highlights the diversity of corporate cryptocurrency investment strategies.

Future Outlook and Risk Warnings

Several analysts express optimism regarding Bitcoin's future trajectory. Mark Palmer, Senior Analyst at New York-based investment bank The Benchmark Company, believes cryptocurrency prices will more than double in the coming years, projecting a Bitcoin price surge to $225,000 by the end of 2026. Pav Hundal, Chief Market Analyst at SwyftX, predicts Bitcoin will trade slightly above $100,000 by the end of 2024.

However, Zhao Wei, Senior Research Fellow at OKX Research, cautions investors to consider the following risk factors: Firstly, price volatility; Bitcoin's price may experience significant short-term fluctuations, necessitating vigilance against rapid corrections. Secondly, regulatory uncertainty; policy adjustments in the US and elsewhere could profoundly impact market sentiment. Finally, the cyclical nature of the crypto market should also be heeded.

To mitigate these risks, investors should establish clear investment goals and strategies commensurate with their risk tolerance, avoiding blind following of trends and maintaining consistent awareness of market dynamics and policy changes. While the Bitcoin market is currently booming, rational investment is paramount. While enjoying market gains, potential risks should not be overlooked. Prudent investing is crucial for long-term success in the virtual asset market. Market volatility is significant; investing involves substantial risk. The above analysis is for informational purposes only and does not constitute investment advice.