Bitcoin Surpasses $90,000, What's Behind the Price Surge?

GSR research analyst Toe Bautista stated after Trump won the U.S. election that, from the perspective of altcoins, many projects have been waiting for an opportunity, observing the issuance of other tokens and the election results. He also believes that if macro conditions remain favorable, the price of Bitcoin may continue to rise. "It is easy to foresee Bitcoin rising to $90,000, whether it is in Q1 of next year or by the end of the month."

After Trump was elected President of the United States, everyone was expecting BTC to quickly surpass $90,000, but indeed did not expect the arrival of this $90,000 to come so fast.

Has the "crazy bull market" returned, and what hidden concerns lie ahead?

MicroStrategy Holdings

MicroStrategy, as a company holding a large amount of BTC, currently holds a total of 252,220 bitcoins, with a total purchase cost of approximately $9.9 billion, an average purchase price of around $39,266, and the current total value of Bitcoin holdings is $20.177 billion.

ETF Inflows

ETFs garnered significant attention at the start due to a large influx of new funds, leading to a new price record for Bitcoin. However, ETFs quickly began to experience net outflows, and market sentiment started to decline. However, more recently, BTC ETFs have continued to see significant inflows, with the overall inflow of the top ten ETFs increasing continuously over a 7-day period.

Not only did they achieve a new high in single-day net inflows, but they also reached a new high in holdings. The logic is also very clear. After Trump's inauguration, there could likely be a "crypto golden era," and the political forces in the U.S. supporting crypto will become stronger. For "whales" in traditional finance, the possibility of them allocating funds to crypto may increase, and BTC ETFs have become the most convenient channel for investing in crypto. For other U.S. stock investors, BTC ETFs will also become very attractive under Trump's administration.

Interest Rate Cuts

The Federal Reserve cut rates by 50 basis points in September, far exceeding expectations, and Bitcoin also surged in response. The November rate meeting also confirmed a 25 basis point rate cut, which was widely understood by the market as a positive factor, especially since the starting point of the last bull market was the rate cut in March 2020.

CPI

Today at 9:30 PM ET, the US released its CPI data, which was in line with both overall and market expectations. The US stock market showed minimal volatility in response to the CPI data, while Bitcoin started to rise and broke through the $90,000 mark. The market's expectations for the CPI data have returned to rationality. Overall, the impact of the CPI data on the Federal Reserve's interest rate cut and other accommodative monetary policies was limited.

November Historical Data

Aside from the data, let's add a touch of ceremony.

According to Coinglass data, following Bitcoin's halving events in 2012, 2016, and 2020, the fourth quarter investment returns were strong at 97.7%, 58.17%, and 168.02%, respectively. The return rates in November 2016 and November 2020 were 5.42% and 42.95%, respectively. The return rate for this month is still promising.

It's worth noting that Bitcoin posted a record gain of 7.35% in September this year, its best performance in history. In previous years, whenever Bitcoin recorded gains in September, it rallied until the end of the year.

After the darkness, history will unfold.

Bitcoin's Future Trend: How Do Traders See It?

PlanB: BTC Could Hit $1 Million by 2025

PlanB is the creator of the Bitcoin Stock-to-Flow (S2F) model, and he enjoys high credibility in the crypto industry for his unique model that links asset scarcity and price. His analysis focuses on Bitcoin's long-term value growth potential, especially after halving events. His latest prediction suggests that if Trump wins the upcoming presidential election, the Bitcoin market may see an unprecedented price surge. PlanB has laid out a timeline for different market scenarios, showcasing Bitcoin's price development.

In his predictions from a few months ago based on his S2F model, PlanB provided specific figures:

November: Trump wins the election, Bitcoin price reaches $100,000. If Trump wins the election, PlanB believes Bitcoin will reach a significant inflection point. He notes that a Trump presidency could bring about crypto-friendly policies, potentially ending the current Biden/Harris administration's "war" on cryptocurrency. In particular, a policy balance against regulatory officials like Gary Gensler and Elizabeth Warren could propel Bitcoin's price directly to $100,000.

December: ETF Inflows Drive Bitcoin to $150,000. PlanB believes that a Trump victory would clear the way for Bitcoin ETF approval, expecting a significant influx of funds into the market. ETF inflows represent mainstream financial market acceptance and investor trust, further propelling Bitcoin's price to $150,000.

January 2025: Crypto Industry Flows Back to the US, Bitcoin Surges to $200,000. With the Trump administration's open stance on cryptocurrency policy, many crypto industry companies and investors may repatriate their businesses to the US. PlanB anticipates this will generate significant market demand, pushing Bitcoin's price to $200,000.

February 2025: 'Power Law' Team Takes Profits, Price Retraces to $150,000. The February retracement is a forecasted correction in the Bitcoin market. PlanB believes that investors' profit-taking will cause Bitcoin to briefly retreat to $150,000 after reaching a high. However, this adjustment will be temporary and necessary, laying a more stable foundation for the next leg up.

March to May 2025: Bitcoin Globalization Trend, Price Surges Past $500,000. Starting in March, PlanB expects countries like Bhutan, Argentina, Dubai, etc., to start adopting Bitcoin as legal tender, with the US launching a Bitcoin strategic reserve in April under Trump's advocacy. Subsequently, in May, he envisions other countries, especially non-EU nations, joining this wave, propelling Bitcoin further to $500,000.

June 2025: AI Boost Drives Price to $600,000. In June, PlanB introduces the hypothesis of AI autonomously engaging in arbitrage in the Bitcoin market. He predicts that as AI participates in the Bitcoin market, this high-frequency trading will further drive the price up, propelling Bitcoin past $600,000.

July to December 2025: FOMO Wanes, Price Reaches $1,000,000. Over the following months, PlanB believes that the market's FOMO sentiment will begin to fade, with Bitcoin poised to reach a new high of $1,000,000 by the year-end. At this point, Bitcoin will not only become a mainstream asset reserve but also a must-have allocation for global investors.

2026-2027: Market Correction and Bear Market. In 2026, PlanB expects Bitcoin's price to retrace from $1,000,000 to $500,000, entering a distribution phase, and by 2027, the market will transition into a bear market, with Bitcoin's price projected to dip to $200,000.

PlanB summarized that the key to this prediction lies in Bitcoin's scarcity value. He pointed out that scarcity would become a core driving factor of asset prices, much like other scarce assets such as real estate and gold. PlanB believes that in the next 18 months, the price of Bitcoin is expected to experience a significant surge driven by the halving effect and market demand, further solidifying its status as "digital gold" among global investors.

PlanB's prediction hinges on Bitcoin's scarcity value, as he noted that investors favor scarcity. Currently, there are basically three choices for scarcity: real estate (S2F 100, market cap $10 trillion), gold (S2F 60, market cap $20 trillion), or Bitcoin (S2F 120, market cap $1 trillion). Therefore, Bitcoin's scarcity will become a core driving factor of asset prices, much like other scarce assets such as real estate and gold.

PlanB presented an alternative scenario, stating that a Harris victory would represent the "end of Western civilization" and further accelerate the decline of the American empire. He predicted that the cryptocurrency industry would face more pressure under Gensler and Warren's regulation, seeing continued suffocation actions and possibly even stricter tax policies, such as the introduction of unrealized capital gains tax. However, he also emphasized that Bitcoin does not rely on a specific regulatory environment, and its value proposition will continue to stem from global demand for scarcity.

Alex Krüger: Spot BTC to Lead on Election Night

Argentinian economist, trader, and advisor Alex Krüger believes that the election results will directly impact Bitcoin's price direction:

Trump Victory: Bitcoin year-end target price $90,000. Krüger believes that following a Trump victory, the price of Bitcoin will rapidly surge to $90,000 by the end of the year, with a 55% probability of realization. In this scenario, he predicts that the Bitcoin price will "quickly spike" as the market has partially priced in the favorable impact of a Trump victory for cryptocurrency. However, there still exists some degree of price underestimation, and the market's swift response will manifest shortly after the news is confirmed.

The Giver: Post-Election Mid-Term Dip Expected

The Giver is an anonymous seasoned investor with extensive experience in trading at both buy and sell-side financial institutions. Currently engaged in special situation private equity investments, he provides a different perspective. The Giver's strategy, compared to Krüger and PlanB, is more conservative and focused on the short term, as he believes that the election-driven Bitcoin rally is more of a temporary phenomenon rather than a long-term trend. This viewpoint particularly emphasizes market liquidity and the driving effect of short-term events, pointing out that Bitcoin may face a downward correction after the election. His specific analysis is as follows:

The driving force behind Bitcoin's recent surge is event-driven "non-sticky" buyers, some seeking to hedge election risk as short-term speculators, rather than due to an overall trend. These buyers will not hold Bitcoin long-term, and once the election dust settles, they may quickly exit the market. Therefore, this capital lacks "stickiness," and post-election, Bitcoin's price may face selling pressure.

The lackluster performance of altcoins is attributed to Bitcoin's concentration. In his view, capital inflows are primarily concentrated in Bitcoin, not widely flowing to altcoins, resulting in the poor performance of altcoins. This indicates that the current fund flow is more based on Bitcoin as a hedge tool rather than a positive factor for the entire crypto market.

The Giver expects that in the upcoming week, Bitcoin's open interest and position will continue to be crowded, possibly reaching new highs. He notes that this "right-hand effect" may cause a short-term surge in Bitcoin's price, but due to the limited market capacity until the fourth quarter of 2024, it is unlikely to continue into the next year. This short-term effect increases the likelihood of Bitcoin's price peaking before the election, but the speculative liquidity behind it is insufficient to support a long-term uptrend.

Based on this assessment, The Giver has proposed a relatively aggressive investment strategy: given the current market environment, he suggests going long on Bitcoin and shorting other mainstream coins and altcoins. Bitcoin will test $70,000 before election day, but regardless of the election outcome, there will ultimately be a mid-term decline. For more related reading: "From the Trump effect, Microstrategy premium to liquidity cycle, analyze the 2024 BTC price performance".

Markus: Long BTC and Short SOL Hedge Strategy

Markus Thielen is a well-known analyst at Matrixport and 10X Research, with high accuracy in predicting Bitcoin's $1 trillion market cap several months ago, quickly gaining popularity in the investment community.

Markus's latest analysis is based on 10X Research's latest signal model, with a hit rate of 73% to 87%, usually achieved within 2 weeks to 9 months. He predicts that if Bitcoin's price continues to develop along historical trends, it may rise by 8% in the next two weeks, 13% in a month, 26% in two months, and 40% in three months. By these calculations, Bitcoin's price may surpass $100,000 by January 27, 2025, and reach a target of about $140,000 by April 29, 2025.

In his analysis of the election results, Markus examined the potential impact of different outcomes on Bitcoin and other crypto assets. Markus predicted that if Trump were to take office, Bitcoin could see a 5% increase, and Solana and Ethereum could experience similar gains. He believes that a Trump victory would bring a more crypto-friendly policy environment, likely fueling a market rally.

In this scenario, Markus recommended a strategy of "long Bitcoin, short Solana" to hedge against election-related uncertainty. However, Markus also noted that if the election results are delayed or contested, it would increase market uncertainty, potentially leading to increased Bitcoin volatility.

In the event of a disputed election result or a Harris victory causing a short-term Bitcoin decline, Markus emphasized that Bitcoin might still demonstrate strong resilience to price drops. Therefore, he advised investors to seize buying opportunities after a short-term Bitcoin dip.

From the derivatives market and on-chain data perspective, the total amount of Bitcoin held by short-term holders increased in October, while the amount held by long-term holders decreased, a dynamic that usually occurs near key price breakthroughs. The total open interest of Bitcoin options has surged to $22.5 billion within 2024, indicating a high bullish sentiment for the Bitcoin bull market. Bitcoin's 25 Delta skew is at the low end of the annual range (-8% to -10%), suggesting a strong bullish sentiment.

Thielen also paid special attention to the impact of MicroStrategy's stock performance on Bitcoin's price. He noted that MicroStrategy's stock price has risen by 33% since October, and the surge in its stock has had a "coattail effect" on Bitcoin prices. The closing of a significant number of short positions has further boosted market bullish sentiment towards Bitcoin.

Standard Chartered Analyst: Trump Victory Could Send BTC to $125K by Year's End

According to a Cointelegraph report on October 25, Standard Chartered Bank analyst Geoff Kendrick predicted that if Trump wins in the November election, Bitcoin's price could climb to $125,000 by the end of the year.

Kendrick's model suggests that on Election Day (November 5), Bitcoin could stabilize around $73,000. In the event of a Trump victory, Kendrick expects Bitcoin to immediately rise by about 4%, followed by a further 10% increase in the following days, driven mainly by rising market confidence and a relaxed regulatory environment.

Meanwhile, another brokerage firm Bernstein's research report suggests that if Trump wins the U.S. election in November, Bitcoin is expected to reach a new high later this year, with the price of Bitcoin potentially reaching $90,000 by the fourth quarter. In contrast, if Harris wins, the market may anticipate increased regulation, causing the BTC price to fluctuate in the range of $30,000 to $40,000.

What we can currently foresee is that BTC has already surpassed its ATH, and there is no technical "resistance level" for future price gains. BTC has not disappointed any spot holders so far. However, there is still about two months until Trump officially takes office. Will there be a new narrative during this "narrative void" period to lead to further gains? Will Trump fulfill his previous promises after taking office? Let's wait and see.