Bitcoin at $100,000: The Trump Effect and Market Risks

Bitcoin at $100,000: The Trump Effect and Market RisksOn the morning of November 22nd, Bitcoin reached a new all-time high, briefly touching $99,300, just a stone's throw from the coveted $100,000 mark. This surge is driven by a complex interplay of market factors and policy expectations

Bitcoin at $100,000: The Trump Effect and Market Risks

On the morning of November 22nd, Bitcoin reached a new all-time high, briefly touching $99,300, just a stone's throw from the coveted $100,000 mark. This surge is driven by a complex interplay of market factors and policy expectations. Over the past day, Bitcoin's price increased by 4.62%, its market capitalization reached $1.96 trillion, and 24-hour trading volume soared by 34.97% to over $145.5 billion. However, this heightened market sentiment is accompanied by risk: Coinglass data reveals that 123,800 traders were liquidated in the past 24 hours, totaling $443 million, with $270 million in short positions liquidated.

This strong Bitcoin rally is closely tied to the outcome of the US presidential election. Since Trump's declared victory, Bitcoin spot ETF funds have seen continuous inflows, accumulating over $6 billion, with net outflows occurring only on two trading days. Currently, the net asset value of US Bitcoin spot ETFs has surpassed $100 billion, with BlackRock's Bitcoin ETF even exceeding its gold ETF in size, reaching $42 billion.

This has led to a general rise in cryptocurrency stocks. On November 21st, US stocks saw Canaan Inc. rise by 8.98% and Riot Platforms climb nearly 5%. However, MicroStrategy (MSTR), a major Bitcoin holder, experienced a significant drop of over 16%. This is mainly attributed to Citron Research, a well-known short-selling firm, announcing a short position on MSTR while going long on Bitcoin. Citron Research argued that MSTR has become a de facto Bitcoin investment fund, not only heavily buying Bitcoin but also issuing bonds to finance further purchases.

MSTR has been highly active recently. The company announced the acquisition of 51,780 Bitcoin for approximately $4.6 billion, bringing its total Bitcoin holdings to 331,200, and plans to issue $1.75 billion in convertible senior notes to further increase its Bitcoin investment. Notably, Tokyo-listed Metaplanet also announced the issuance of 1.75 billion in one-year bonds to purchase Bitcoin.

Furthermore, there are rumors that Trump's social media company is in talks to acquire Bakkt, the cryptocurrency trading platform owned by Intercontinental Exchange. Even more noteworthy is the possibility of the White House establishing a dedicated position responsible for cryptocurrency policy. Media reports suggest Trump's team is discussing this possibility with the digital asset industry, with the role designed to facilitate communication and coordination between Trump, Congress, and relevant federal agencies such as the SEC and CFTC.

HashKey Exchange CEO, Jenny Wan, stated that following Trump's election, Bitcoin would receive significant policy support, such as inclusion in government reserves, the establishment of a presidential advisory council, and the replacement of the SEC chair. These actions would create a more favorable market environment and expand Bitcoin's upside potential. She believes that the current White House transition period, a policy vacuum lasting until Trump's official inauguration in late January, will help ease financial market tensions. The promise of Bitcoin becoming a US reserve asset could materialize. If this happens, existing US-held cryptocurrency would be less likely to be sold into the market, reducing potential downside; government purchases would also open up new upside potential.

$100,000 represents a milestone for Bitcoin. Since Trump's victory, its price has steadily risen, surpassing $70,000, $80,000, and $90,000. Currently, the crypto market is exhibiting extreme greed.

However, reaching $100,000 remains challenging. Zhao Wei, a senior researcher at OKX Research Institute, points out that, firstly, the US regulatory stance on the crypto market remains unclear; secondly, Bitcoin's recent rapid rise has pushed it into overbought territory, increasing the risk of a short-term correction; and thirdly, the ability to continuously attract new capital inflows is crucial. He believes that against the backdrop of US policy adjustments, Bitcoin's price will be influenced by policy changes, capital inflows, and market sentiment. Short-term volatility may intensify, requiring investors to exercise caution and implement effective risk management strategies.

In the medium to long term, the mainstream adoption of cryptocurrencies is accelerating. Institutional investor participation and market expansion are driving cryptocurrencies from niche assets towards the mainstream financial system. The successful launch of Bitcoin spot ETFs will likely lead to more diverse cryptocurrency ETFs, accelerating market diversification.

In summary, Bitcoin's continuous price surge is closely related to the policy expectations and market capital inflows following Trump's election. However, the uncertainty surrounding US cryptocurrency regulation, overbought market risks, and the sustainability of capital inflows all pose challenges to Bitcoin's price increase. Investors need to closely monitor market dynamics, make prudent decisions, and manage risks effectively. While the $100,000 mark is within reach, the path to breaking it remains uncertain. Rational analysis and risk control are crucial alongside optimism. The sustainability of this Bitcoin rally driven by the "Trump trade" remains to be seen, and investors need to remain highly vigilant about potential risks. Breaking the $100,000 barrier is both a market expectation of Bitcoin's future value and a test of market risk tolerance.