Bitcoin Surges Past $88,000 Amidst Trump's Promise of a "Crypto New Era"

Bitcoin Surges Past $88,000 Amidst Trump's Promise of a "Crypto New Era"Bitcoin's price has broken through the $88,000 mark, setting a new all-time high. This surge in the cryptocurrency market is attributed to investor anticipation of a new age of crypto investment under a Trump administration

Bitcoin Surges Past $88,000 Amidst Trump's Promise of a "Crypto New Era"

Bitcoin's price has broken through the $88,000 mark, setting a new all-time high. This surge in the cryptocurrency market is attributed to investor anticipation of a new age of crypto investment under a Trump administration.

On Tuesday, Bitcoin saw an increase of over 10%, adding up to a 14% rise in the past five days, pushing it to $88,378. Smaller cryptocurrencies have seen even greater gains, with Dogecoin, for instance, soaring over 100% since early November.

During his campaign, Donald Trump pledged to put the United States at the forefront of the cryptocurrency industry, including establishing a Bitcoin strategic reserve and appointing pro-crypto regulators. He also promised to remove Gary Gensler, the current Securities and Exchange Commission (SEC) Chair, who has repeatedly accused the crypto sector of fraudulent activities. These promises have ignited anticipation of Trump's policy stance and spurred investor enthusiasm for the entire crypto space.

Caroline Bowler, CEO of BTCMarkets, stated that the rapid growth of Bitcoin has driven the rise of other cryptocurrencies, and the entire crypto industry is poised to benefit from a Trump administration. Data shows that fueled by Bitcoin's surge, the global cryptocurrency market capitalization has surpassed $3 trillion for the first time since November 2021.

The strong demand for cryptocurrencies is evident in the influx of funds. BlackRock's $35 billion iShares Bitcoin Trust, for instance, recorded a record daily net inflow of nearly $1.4 billion last Thursday, now exceeding the fund's total assets of the $33 billion iShares Gold Trust.

Sosovalue data reveals that over the past three trading days, starting from November 5th, 12 spot Bitcoin exchange-traded funds (ETFs), including BlackRock's IBIT and Fidelity's FBTC, have collectively seen a net inflow of $2.3 billion.

While Bitcoin has experienced a strong rally recently, gold has been lagging. Brent Donnelly, a renowned forex analyst, points out that the weakness in gold suggests investors may not hold high expectations regarding the scale of Trump's fiscal spending. Donnelly believes that the new administration might prioritize controlling inflation, leading to a reduction in aggressive deficit spending policies.

MicroStrategy's Massive Bitcoin Purchase Fuels Stock Surge

Amidst Bitcoin's continuous rise, institutional investors have been actively participating. On Monday, MicroStrategy released a statement disclosing a recent purchase of 27,200 Bitcoins for approximately $2.03 billion, marking their largest Bitcoin acquisition since December 2020. These Bitcoins were purchased between October 31st and November 10th.

Since 2020, MicroStrategy co-founder and chairman Michael Saylor has embarked on a strategy to invest in Bitcoin as a hedge against inflation. Initially, MicroStrategy acquired Bitcoin using cash and later expanded its purchasing power through stock issuance, sales, and convertible bonds.

This large-scale purchase has increased MicroStrategy's Bitcoin holdings to approximately 279,420. Based on Bitcoin's latest price, the current holdings are valued at over $24 billion. Data shows that MicroStrategy and its subsidiaries have collectively acquired these Bitcoins for a total cost of around $11.9 billion, with an average cost of $42,692.

MicroStrategy's stock surged over 25% on Monday. Since August 2020, the company's stock has risen over 2500%, outperforming Bitcoin's 660% growth during the same period. Moreover, MicroStrategy's performance since mid-2020 has surpassed almost all major U.S. stocks, even exceeding the AI leader Nvidia's growth by double.

Beyond MicroStrategy, renowned Brazilian hedge fund VerdeAssetManagement has also placed a recent bet on Bitcoin. The fund is managed by veteran investor Luis Stuhlberger, who expressed bullish sentiment on Bitcoin, neutrality towards the Brazilian stock market, bullishness on the Indian Rupee, and bearishness on the Euro.

Investors Betting on Year-End Breakthrough to $100,000, Analysts Warn of Risks

Currently, Bitcoin options traders have set their sights on $100,000. According to data from Deribit, a cryptocurrency options exchange, investors are placing bets on Bitcoin reaching this milestone by the end of the year. As of Monday morning, approximately 9,635 Bitcoins (valued at about $780 million) were held in outstanding contracts betting on Bitcoin hitting $100,000 by December 27th, making it the largest trade for contracts expiring on that date. However, Deribit estimates that the likelihood of this contract expiring in the money is only 18.6%.

Nick Foster, founder of Derive decentralized finance protocol, stated, "The market has seen significant movement following the US election, and traders are putting a lot of money on the $100,000 call options expiring on December 27th, making it one of the most watched trades lately."

Despite rising bullish sentiment among investors, some caution prevails. Market analysts point out the uncertainty surrounding Trump's ability to fulfill his cryptocurrency promises during his campaign, as there has been no tangible progress. As the future unfolds, traders need to be mindful of potential risks.