Bitcoin Surges Past $100,000: 37% Monthly Gain, but Volatility Remains

Bitcoin Surges Past $100,000: 37% Monthly Gain, but Volatility RemainsOne month after the US presidential election, Bitcoin's price broke through the $100,000 mark on December 5th, reaching a new all-time high. This represents a remarkable 37% monthly increase, the highest monthly gain since February and the largest single-month price surge in its history

Bitcoin Surges Past $100,000: 37% Monthly Gain, but Volatility Remains

One month after the US presidential election, Bitcoin's price broke through the $100,000 mark on December 5th, reaching a new all-time high. This represents a remarkable 37% monthly increase, the highest monthly gain since February and the largest single-month price surge in its history. However, a dramatic downturn followed on the morning of December 6th, with Bitcoin plunging below $90,000, hitting a low of $89,711.9 before quickly recovering. The price at the time of writing is $97,489.4, with a 24-hour decline of 3.76%. This brief crash resulted in liquidations exceeding $1 billion, affecting nearly 210,000 traders.

Yu Jianing, principal of Uweb and honorary chairman of the Hong Kong Blockchain Association, noted that despite Bitcoin's strong upward momentum, market volatility remains significant. He believes the long-term outlook for Bitcoin remains strong based on its fundamentals. Increasing clarity in global digital asset regulation, continued institutional investment, and growing market demand are all expected to boost Bitcoin. Furthermore, global monetary policies and inflationary pressures will enhance Bitcoin's appeal as a hedge asset. Therefore, while short-term price fluctuations and market sentiment will continue to influence the market, the long-term prospects for Bitcoin remain positive.

Over $6 Billion Flows into Bitcoin ETFs, Trading Volume Hits Record High

Bitcoin's ascent from $70,000 to $100,000 occurred within just one month. Data from CCData shows that cryptocurrency combined trading volume doubled in November. Spot trading volume increased by 128% to $3.43 trillion, the second highest since May 2021; derivatives trading volume surged by 89% to $6.99 trillion, setting a new record high. Bitcoin and Ethereum saw significant gains in November, exceeding 37% and 45%, respectively. Simultaneously, XRP's market capitalization jumped from under $30 billion in early November to over $137 billion, making it the third-largest cryptocurrency; Dogecoin soared over 150%. CoinGecko data indicates that the cryptocurrency market capitalization has increased by approximately $1.2 trillion since the US presidential election, currently exceeding $3 trillion.

Coinglass data reveals that net inflows into Bitcoin and Ethereum spot ETFs in November reached record highs. Bitcoin spot ETFs saw a cumulative net inflow of $6.419 billion in November, with net outflows occurring on only seven trading days; Ethereum spot ETFs saw a net inflow of $1.06 billion. On November 29th, subscriptions for Ethereum ETFs reached a record daily high. Dune data shows that the total on-chain holdings of US Bitcoin spot ETFs have surpassed 1.128 million BTC, accounting for 5.7% of the current Bitcoin supply and exceeding even Satoshi Nakamoto's estimated holdings.

Yu Jianing attributes the strong gains in Bitcoin and the broader crypto market in November to the positive market sentiment following the US presidential election. Technically, November's surge broke through the year's wide trading range, establishing a healthier upward trend. However, this rally also brings cyclical challenges, and the market may experience technical corrections in the short term, particularly as the $100,000 price point prompts some long-term investors to take profits.

$100,000: Bitcoin's Endpoint or Starting Point?

Market opinions on Bitcoin's future price trajectory are sharply divided. Geoffrey Kendrick, head of emerging markets FX research and crypto research at Standard Chartered Bank, predicts a price of approximately $200,000 by the end of next year, fueled by increased institutional investment. Standard Chartered anticipates that regulatory changes under the new administration will facilitate greater participation from traditional finance in digital asset investment, with increased allocation of Bitcoin ETFs by pension funds by 2025. Even a small percentage allocation from the $40 trillion US pension fund market would significantly boost Bitcoin's price.

Nigel Green, CEO of financial services firm deVere Group, expects a short-term correction in Bitcoin as a natural response to rapid price appreciation and profit-taking. However, he believes this is temporary and Bitcoin will continue its upward trajectory, reaching $120,000 by the first quarter of 2025.

The market volatility, however, has raised concerns. Ben Carlson, an analyst at Ritholtz Wealth Management, advises investors to approach the market rationally and reflect on their motivations. He cautions against impulsive buying driven solely by price increases, which can lead to a "buy high, sell low" cycle. Vanessa Lyon of the Boston Consulting Group warns that while the new administration's policies might offer short-term benefits, inadequate regulation could pose greater market risks. Susannah Streeter, head of funds and markets at Hargreaves Lansdown, advises investors to only use funds they are prepared to lose, given the history of dramatic price swings.

NFT Ecosystem Rebounds, but Challenges Remain

Bitcoin's sustained price increase has rejuvenated the broader crypto ecosystem. CryptoSlam data reveals that CryptoPunks led the NFT market in November, with 30-day sales exceeding $49 milliona 392% month-over-month increaseand 388 transactions, a 213% increase from October. Pudgy Penguins saw a 262% month-over-month sales increase, reaching $16 million in sales. Yu Jianing attributes this to the increased attention and improved investor sentiment generated by Bitcoin's surge, boosting other digital assets like NFTs and expanding the overall digital asset market.

On November 29th, Justin Sun, founder of Tron, infamously ate the $6.24 million banana artwork "Comedian," refocusing attention on the NFT space. November's NFT market sales exceeded $562 million, a 57.8% increase from October's $356 million. Ethereum network sales exceeded $216 million, a 12% increase from October. Bitcoin on-chain NFT sales surpassed $185 million, the highest since June.

Despite the increase in trading volume, the NFT market remains immature. Yu Jianing highlights issues such as excessive speculation driving irrational bubbles and liquidity problems hindering market activity and price stability. He envisions a more diversified future for NFT applications, potentially becoming core tools for digital asset management and identity verification in the digital world. Increased regulation and standardization, including clear rules on NFT copyright and trading, will enhance legal protection and stability, attracting institutional and long-term investors. He also points to the potential of Web3.0 and AI integration, real-world asset tokenization (RWA), and tokenized securities as promising areas for future growth.

Differing Views: Limited Value Beyond Bitcoin

Wang Yingbo, a digital economy scholar at the Shanghai Academy of Social Sciences, offers a dissenting view, asserting that the value of cryptocurrencies beyond Bitcoin, including the NFT market, is limited and unlikely to match Bitcoin's growth. He argues that the near-zero marginal cost and strong economies of scale inherent in digital currencies will lead to a "winner-takes-all" scenario.