Bitcoin Frenzy Under the "Trump Effect": Above $90,000, a Golden Age Dawning?

Bitcoin Frenzy Under the "Trump Effect": Above $90,000, a Golden Age Dawning?Wu Bin, a reporter for the 21st Century Business Herald, reports from Shanghai: Driven by a series of announcements, Bitcoin's price has once again approached its all-time high, successfully returning above $90,000 on November 18th. This recent surge in Bitcoin's price is closely linked to the activities of US President-elect Trump and his administration, a phenomenon the market has dubbed the "Trump trade

Bitcoin Frenzy Under the "Trump Effect": Above $90,000, a Golden Age Dawning?

Wu Bin, a reporter for the 21st Century Business Herald, reports from Shanghai: Driven by a series of announcements, Bitcoin's price has once again approached its all-time high, successfully returning above $90,000 on November 18th. This recent surge in Bitcoin's price is closely linked to the activities of US President-elect Trump and his administration, a phenomenon the market has dubbed the "Trump trade." Trump Media & Technology Group is reportedly in advanced talks to acquire Bakkt, the cryptocurrency trading platform owned by Intercontinental Exchange (ICE); on the 18th, Trump also met with the CEO of Coinbase, a cryptocurrency exchange platform, to discuss personnel matters for the next administration. Boosted by this news, Bakkt's stock price soared by 162.46%, reaching a market capitalization of approximately $400 million; Trump Media & Technology Group's stock price rose by 16.65%, resulting in a market capitalization of $7.11 billion; and Coinbase's stock price increased by 6.4%, with a market capitalization of approximately $80 billion. The cryptocurrency market consequently erupted in a frenzy.

Following Trump's election victory, Bitcoin's price surged by over 30%, with the market widely anticipating that the new US federal government would introduce policies favorable to the cryptocurrency industry. Trump previously pledged that if he returned to the White House, he would ensure the government retained 100% of its Bitcoin holdings and designate it as a strategic reserve asset. However, Polymarket, a cryptocurrency prediction platform, prices the likelihood of Trump establishing a Bitcoin reserve upon taking office at only around 30%.

Jennifer J. Schulp, Director of Financial Regulation Studies at the Cato Institute's Center for Monetary and Financial Alternatives, points out that establishing a Bitcoin reserve would expose government funds to risk, and Bitcoin hasn't demonstrated the characteristics of a particularly stable asset. Gao Chengshi, Executive Committee Member of the Blockchain Special Committee of the China Computer Federation, analyzes that cryptocurrency investment differs significantly from traditional securities and futures investments. Although many countries, including the US, strictly regulate various cryptocurrency exchanges, numerous factors can influence or even manipulate cryptocurrency prices. Different cryptocurrencies also have extremely high levels of internationalization, far beyond the control of any single government's regulatory capabilities. Even Bitcoin, a cryptocurrency with high consensus, exhibits price volatility far exceeding that of traditional trading assets. Therefore, retail investors, institutional investors, and even some national governments must be acutely aware of its high volatility when investing in cryptocurrencies. Furthermore, investing in emerging cryptocurrencies carries higher risks but also potentially greater returns. It is noteworthy that most of Trump's policies are expected to increase US inflation, leading to higher US Treasury yields and a stronger dollar, which would negatively impact cryptocurrencies, including Bitcoin. Despite the currently optimistic market sentiment, various signs suggest that the cryptocurrency market, which has enjoyed favorable conditions this year, still faces challenges ahead, and whether it can usher in a "golden age" remains questionable.

Bitcoin Returns Above $90,000: In January of this year, Bitcoin's price fell below $40,000, while its current price is more than double. Ding Zaofei, chief analyst at HashKey Group, points out that Bitcoin's price has continued to rise recently, reaching as high as $93,000, setting a new all-time high, with a market cap of $1.8 trillion. This means Bitcoin has surpassed silver to become the eighth-largest asset globally by market capitalization, indicating that interest in Bitcoin has reached a level comparable to other mainstream assets. Zhao Wei, a senior researcher at OKX Research Institute, stated that according to OKX market data, Bitcoin's price once again broke through $92,000 at noon on November 18th, continuing to attract market attention.

This round of Bitcoin and cryptocurrency market gains is influenced by the results of the US election, particularly Trump's positive stance on cryptocurrencies during his campaign, which stimulated greater investor interest and boosted Bitcoin's market enthusiasm. After the election results were announced, the Fed's rate cuts and inflows into Bitcoin spot ETFs further fueled market sentiment.

Behind Bitcoin's continued rise, the "Trump trade" is a key driver, but other factors are also at play. Ding Zaofei believes there are three main reasons for Bitcoin's rise: First, after Trump's election, Bitcoin may receive significant policy support, such as inclusion in government reserves, the establishment of a presidential advisory committee, and a change in the SEC chairman. These measures would create a more favorable market environment for Bitcoin and expand its upside potential. Second, the current period of White House transition, before Trump officially takes over at the end of January, represents a regulatory and policy vacuum, and a relatively relaxed political environment helps ease previous tensions in the financial markets. Third, the liquidity resulting from a shift in central bank policy is imminent. The Fed continued to lower interest rates by 25 basis points in November, increasing market liquidity and raising demand for high-risk assets like Bitcoin, further pushing up prices. In addition, MicroStrategy bought approximately 51,780 Bitcoins for approximately $4.6 billion over the past week, boosting Bitcoin's price. MicroStrategy plans to issue $1.75 billion in convertible notes to purchase more Bitcoin. Moreover, the market has undergone a mid-term adjustment since April this year, allowing market sentiment to be released, and optimism has driven market gains.

Can Bitcoin continue its upward trajectory? Driven by the "Trump trade," Bitcoin's cumulative gains have exceeded 30%. Ding Zaofei says that thanks to strong buying pressure, Bitcoin has risen sharply again, even exhibiting an independent performance from the Nasdaq. Has the "Trump trade" run its course? Ding Zaofei believes it's too early to tell. The impact of cooling expectations for Fed rate cuts is relatively short-term; the market may quickly price in the downward revision of rate cut expectations, and the trend of a soft landing for the US economy and core corporate profit growth remains unchanged in the long term. Bitcoin faces short-term selling pressure. Ding Zaofei points out that the significant short-term rise has triggered some selling by investors. On-chain data shows that over 20,000 Bitcoins flowed out of centralized exchanges this week, indicating that selling was less than the amount bought by new investors. As of November 16th, the average unrealized profit for short-term investors still remains at a high of 26%, suggesting significant remaining selling pressure. Once capital inflows slow, prices may decline in the short term. The considerable divergence between bullish and bearish sentiment is also a reason for the recent dramatic price swings. Zhao Wei cautions that although the current upward momentum is strong, whether the market can sustain its rise depends on the speed at which investors digest good news and the timing of policy changes.

In the long term, Trump's re-election could positively impact the regulatory process for the crypto market, potentially boosting investor confidence. As Bitcoin's leading position in the market solidifies, it's expected to attract more institutional and individual investors, further driving market expansion. However, given the volatility of the crypto market and global economic uncertainty, investors should remain cautious and make reasonable risk management decisions based on their risk tolerance.

From a medium-to-long-term perspective, many analysts expect further Bitcoin price increases. Pat Tschosik, a strategist at Ned Davis Research, says cryptocurrencies are exploding due to optimism over Trump's victory, and there's little resistance to Bitcoin's price increase at least until Trump's inauguration; Bitcoin could soar above $120,000 by next spring. Geoff Kendrick, Global Head of Digital Asset Research at Standard Chartered Bank, predicted in October that if Trump won, the price of Bitcoin would reach $125,000 by the end of this year and $200,000 by the end of 2025. Ding Zaofei also holds a cautiously optimistic view, predicting further upside potential for Bitcoin. The "Trump trade" is now truly beginning to exert its power, coupled with the Fed's November rate cut of 25 basis points and the expectation of ending quantitative tightening next year; Bitcoin has ample time to find a new price platform. Furthermore, with the Republicans having won the presidency, Senate, and House, and the Supreme Court being dominated by conservative justices, the "unified government" may bring about a new wave of Web3 opportunities.

Gao Chengshi analyzes that as regulatory policies in major countries become increasingly comprehensive, investor acceptance of mainstream cryptocurrencies gradually improves, and mainstream cryptocurrencies like Bitcoin demonstrate their effectiveness; cryptocurrencies will inevitably play a more important role in the investment portfolios of various investors in the future. But investors will certainly differentiate between different types of cryptocurrencies. For example, Bitcoin enjoys strong consensus and a high degree of decentralization, and will therefore become a very important component of investment portfolios.

A Policy Milestone Approaching? The cryptocurrency market has seen continuous positive news this year. Following the launch of Bitcoin spot ETFs and Ethereum spot ETFs, the new US administration and Congress are likely to support cryptocurrencies. Ding Zaofei analyzes that Trump won the presidency, and the Republicans also control the US Senate and House, meaning that there are fewer obstacles to the advancement of various legislative initiatives, especially as several previous pieces of legislation targeting the