Bitcoin's meteoric rise: A $8 Billion surge in two days What are the odds of hitting $100,000?

Bitcoin's meteoric rise: A $8 Billion surge in two days What are the odds of hitting $100,000?Bitcoin's price has recently reached new highs, igniting the global market, fueled by factors such as Trump's election and anticipated Federal Reserve policy adjustments. In just two days, investors raked in nearly $8 billion, a staggering sum

Bitcoin's meteoric rise: A $8 Billion surge in two days What are the odds of hitting $100,000?

Bitcoin's price has recently reached new highs, igniting the global market, fueled by factors such as Trump's election and anticipated Federal Reserve policy adjustments. In just two days, investors raked in nearly $8 billion, a staggering sum. However, behind this dazzling price surge are both positive policy expectations and significant speculative characteristics; dramatic volatility has become a defining feature. The question of whether Bitcoin can break the $100,000 barrier is now central to market participants, and this article will delve into the causes of this price surge, potential risks, and future predictions.

I. Bitcoin's Price Soars: The Drivers Behind the $8 Billion Wealth Effect

Bitcoin's remarkable rally began on November 5th, 2024, with the US presidential election, culminating in a new all-time high of over $93,400 on November 13th, representing an approximately 35% increase since before the election. According to Santiment data, in just 48 hours (November 13th-15th), investors reaped nearly $8 billion (approximately RMB 580 billion), the highest level since October 9th.

This surge is primarily driven by two key factors:

First, US inflation data met analyst expectations. This prompted traders to increase their bets on a further 25-basis-point interest rate cut by the Fed in December. Rate cut expectations injected vitality into risk assets, and Bitcoin, as a high-risk, high-reward asset, naturally benefited.

Second, Trump's campaign promises included policies favorable to cryptocurrency development, significantly boosting market sentiment. This policy expectation acted as a powerful catalyst for the market's upward trajectory, attracting massive capital inflows.

The active participation of institutional investors also infused new momentum. Data shows that the number of open contracts for Bitcoin futures on the CME reached a record high of 35,973 in November, with a notional value of $13.9 billion. Simultaneously, since election day on November 5th, US spot Bitcoin ETFs saw net inflows of $4.7 billion, with a total asset value of approximately $94 billion across 12 institutionally issued Bitcoin ETFs. BlackRock's iShares Bitcoin Trust, with nearly $43 billion in assets, stands as the world's largest Bitcoin fund, clearly demonstrating institutional investors' positive positioning in this emerging asset class. This also indirectly reflects institutional confidence in Bitcoin's future prospects.

II. Market Risks Emerge: Intensified Volatility and Key Price Level Battles

However, this upward trend hasn't been without its setbacks. On November 15th, Federal Reserve Chair Powell stated that a rate cut wasn't urgent; Bitcoin's price promptly dropped below $87,000, a fall of approximately $6,500 from its November 13th high. This event highlighted the market's extreme sensitivity to macroeconomic policies and served as a reminder to investors that market risks should not be underestimated.

Julio Moreno, Head of Research at CryptoQuant, revealed that large miners significantly profited by moving approximately 25,000 Bitcoins, further exacerbating market volatility. Meanwhile, data from the derivatives market shows signs of cooling. A K33 Research report indicates a decline in the premium of CME Bitcoin futures relative to the spot market, suggesting a decrease in market risk appetite. Vetle Lunde, Head of Research at K33, believes that the narrowing of the futures premium might signal cooling risk appetite. James Davies, CEO of CryptoValley Exchange, a blockchain-based futures and options trading platform, agrees, noting the current market's predominantly speculative nature and predicting significant volatility until US policies become clearer. He particularly cautions investors to watch the fluctuations around the key price level of $90,000, observing whether it acts as resistance.

Currently, Bitcoin's price has rebounded above $91,000, but market volatility persists.

III. The $100,000 Target: Optimistic Expectations and Potential Risks Coexist

Despite increased market volatility, optimistic traders remain bullish on Bitcoin, anticipating a breakthrough of the $100,000 mark. Options market data shows $850 million worth of options contracts betting on Bitcoin exceeding $100,000 before their December 27th expiry. Data from Deribit exchange shows the highest concentration of call option volume at the $100,000 strike price, reflecting strong market expectation for a breach of this psychological barrier.

The Trump campaign's policy pledges were a significant driver of this rally. The cryptocurrency industry donated $170 million to super PACs of three congressional candidates seen as allies, betting on a wave of deregulation and industry-friendly policies. Trump's promise to create a Bitcoin reserve and his statement about firing SEC Chair Gary Gensler, known for his hawkish regulatory stance, undoubtedly positively impacted market sentiment.

However, Bitcoin needs more support to break the $100,000 barrier. Matt Hougan, CIO of Bitwise, states that this requires more demand from investors and the Federal Reserve. He believes that if Bitcoin erodes a portion of gold's market share and governments hold it as a reserve, the price could reach $500,000.

IV. Speculative Frenzy and Market Fragility: Increased Retail Investor Participation

It's worth noting that retail investor enthusiasm is also heating up. Google search data shows that Bitcoin-related searches have climbed to levels seen before the 2022 industry crisis. Small-cap tokens have also seen substantial gains, with Dogecoin more than doubling since the November 5th US election. This reflects heightened speculative sentiment but also exposes the market's fragility.

Technically, the 14-week Relative Strength Index (RSI) shows Bitcoin in overbought territory, suggesting a potential pullback. Analysts point out that a daily close below $73,777 would invalidate the current bullish thesis.

V. Subsequent Influencing Factors and Risk Warnings: The Dual Impact of Macroeconomics and Regulatory Policies

As the market expands, Bitcoin price volatility is likely to intensify, requiring investors to carefully monitor various risk factors. Institutions believe multiple factors will affect the sustainability of this Bitcoin rally:

First is the direction of the Federal Reserve's monetary policy. If inflation resurfaces, leading to tighter monetary policy, it could pose resistance to Bitcoin.

Second is the concrete implementation of the Trump administration's policies, including the development of the regulatory framework and the establishment of strategic reserves. Policy uncertainty remains a significant risk to the market.

Furthermore, the continued participation of institutional investors will be a key factor, as their capital flows can significantly influence market trends.

Changes in stablecoin supply have also become an important market indicator. Increased stablecoin supply reflects not only confidence in cryptocurrencies but also provides potential support for future price increases. Data shows that since August 5th, 2024, Tether has minted over 7 billion USDT on the Ethereum blockchain.

It's crucial to note that speculative market sentiment can lead to sharp price swings. According to CryptoQuant data, the holdings of large holders (i.e., "whales") possessing 1,000 to 10,000 Bitcoins have recently increased significantly, indicating that large investors are optimistic about the market outlook. However, this concentrated holding can also pose price volatility risks.

VI. Conclusion: Cautious Optimism, Rational Investment

Bitcoin's price explosion has captivated global attention, with its underlying policy expectations and institutional participation being significant drivers. However, market volatility and potential risks are ever-present. Investors should maintain cautious optimism, invest rationally, and closely monitor changes in macroeconomic policies, the regulatory environment, and market sentiment. Avoid blindly chasing highs to mitigate investment risks. In the coming period, the clarification of US policy and the direction of the Federal Reserve's monetary policy will be crucial factors influencing Bitcoin's price trajectory.