Bitcoin Plunges Below $94,500 Amidst Wall Street's Crypto ETF Push and Upgraded MSTR Target Price

Bitcoin Plunges Below $94,500 Amidst Wall Street's Crypto ETF Push and Upgraded MSTR Target PriceMonday, November 25th saw significant volatility in the cryptocurrency market. Bitcoin continued its weekend decline, falling below $94,500 a drop of over 2

Bitcoin Plunges Below $94,500 Amidst Wall Street's Crypto ETF Push and Upgraded MSTR Target Price

Monday, November 25th saw significant volatility in the cryptocurrency market. Bitcoin continued its weekend decline, falling below $94,500 a drop of over 2.2% nearing its November 21st low of $93,850.62 and shedding over $2,000 in a single day. In contrast, Ethereum showed relative resilience, rising as much as 3.9% intraday and hovering around $3,500. Blockchain-related stocks exhibited a mixed performance, reflecting a divergence in market sentiment.

Some blockchain stocks performed strongly, with Kodak soaring 18.6%, Beyond Inc. rising over 9.4%, Ebang International ADR up over 8.6%, Applied Digital climbing over 8.4%, the Ether ETF (ETH) gaining 6.65%, Robinhood increasing by approximately 3.3%, and cryptocurrency exchange giant Coinbase adding about 2.5%. However, other stocks closely tied to Bitcoin experienced sharp declines. MicroStrategy (MSTR), a "Bitcoin whale," closed down over 4%, TeraWulf fell over 6%, and BTCDigital dropped over 8%. This divergence reflects varying market expectations regarding the future trajectory of cryptocurrencies and the profitability of related companies.

Bitcoin's price drop may be linked to news from the US political arena. The nomination of [Name of nominee] for Treasury Secretary led to market expectations of prioritizing economic and market stability, interpreted as the beginning of a "Mnuchin 2.0" era. This suggests a more cautious and gradual approach to fiscal policy under the new administration. This expectation resulted in declines in both the dollar and Bitcoin prices, while US Treasury bond prices rose. The market generally believes that a government under [Nominee's name]'s leadership will adopt a more prudent fiscal policy compared to the Trump administration, potentially negatively impacting risk assets, including Bitcoin.

However, positive news also emerged in the crypto space. Wall Street is actively preparing to launch new cryptocurrency-related ETFs, indicating growing institutional interest in the cryptocurrency market. Media reports suggest that executives and lawyers involved in ETFs are developing strategies to cater to diverse investor risk profiles. These planned ETFs encompass products with varying risk levels, including defensive ETFs aimed at professional fund managers and speculative ETFs targeting high-risk investors. High-risk cryptocurrency ETFs might invest in a diverse range of digital tokens and potentially employ leverage, options, or quantitative strategies.

Since the US election, some cryptocurrency ETFs solely tracking Bitcoin have attracted billions of dollars. The market generally anticipates that under a [Name of President]-elect administration, the Securities and Exchange Commission (SEC) will be more receptive to new digital currency products compared to the Biden administration. The ETF industry may enter a "Wild West" era, with the SEC's new leadership significantly influencing the approval of cryptocurrency ETFs. Several digital asset companies have already applied to the SEC to launch ETFs tracking cryptocurrencies like Solana, XRP, and Litecoin. These applications had a low probability of approval under Gary Gensler's leadership but are now considered significantly more likely under the new administration. Furthermore, tokens like Aave, Uniswap, and Maker are also seen as suitable for ETF products.

Meanwhile, prominent Wall Street firm Bernstein significantly raised its target price for MSTR from $290 to $600, suggesting a further 40% upside potential. This contrasts sharply with Citron's recent bearish outlook. Bernstein projects that MSTR will hold 4% of the global Bitcoin supply by 2033, significantly higher than its current 1.7%. Bernstein believes MSTR's Bitcoin treasury management model is unparalleled and is convinced that Bitcoin is in a structural bull market supported by regulation, government backing, and institutional adoption. Another brokerage, Canaccord, also raised its MSTR target price from $300 to $510 and reiterated its buy rating, arguing that traditional profit and loss statement metrics are no longer applicable to MSTR and a new valuation method should be employed.

MSTR CEO Michael Saylor responded to Citron's short report, arguing that Citron failed to understand the source of MSTR's premium relative to Bitcoin. Saylor highlighted that MSTR profits from volatility trading and leverages through ATM operations; as long as Bitcoin continues to rise, the company can continue to profit. He estimated that, based on an 80% Bitcoin price spread, $3 billion in ATM financing could generate $125 per share in earnings over 10 years. Despite a pre-market surge of 6% on Monday, MSTR ultimately closed down over 4%, indicating persistent market complexity and volatility. MSTR's price action reflects ongoing disagreement about Bitcoin's future trajectory and MSTR's corporate strategy. This event underscores the inherent risks and opportunities in cryptocurrency market investments. Investors need to thoroughly analyze market information and make investment decisions based on their risk tolerance.