Key Factors Fueling The Surge
Bitcoin shattered previous records, crossing the $100,000 milestone for the first time, reaching an all-time high of $104,088 in New York on Wednesday night. The flagship cryptocurrency fell to $94,587 on Wednesday but has since staged a stunning rebound. Several key factors contributed to this unprecedented surge:
#1 Fed Chairman Powell Compares Bitcoin to Gold
Federal Reserve Chairman Jerome Powell discussed Bitcoin at the New York Times DealBook Summit, which was highly recognized by the traditional financial community. When asked about how he views Bitcoin as a symbol of confidence, or lack thereof, in the U.S. dollar and the Fed, Powell offered a nuanced view.
“I don’t think that’s what people think,” Powell said. “People are using Bitcoin as a speculative asset, right? Just like gold. It’s just like gold, except it’s virtual. It’s digital. People are not using it as a method of payment or a store of value. It’s There’s a lot of volatility. It’s not a competitor to the dollar; it’s really a competitor to gold.”
This comparison to gold, the traditional store of value, may be seen by many as another strong legitimization of Bitcoin within the financial ecosystem.
If your central bank owns gold but rejects digital gold… they’re screwed. How does the digital bet work for companies like Kodak, Blockbuster, Sears, the Yellow Pages, newspapers, taxis, the postal service, libraries, travel agencies, and more?
This is the most obvious deal in history https://t.co/tdJp8XCTjO
— David Bailey🇵🇷 $0.85mm/btc is the floor (@DavidFBailey) December 4, 2024
#2 Russia’s Putin expresses openness to Bitcoin
The momentum was further boosted by comments made by Russian President Vladimir Putin on the Russia Call forum, which many interpreted as an endorsement of Bitcoin.
“Who can ban Bitcoin? No one,” Putin said. “Who can prohibit the use of other electronic payment methods? No one. Because these are new technologies. No matter what happens to the dollar, these tools will evolve one way or another as everyone strives to reduce costs and improve reliability ”
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Putin’s comments came amid speculation about an impending “Bitcoin space race” between global superpowers. President-elect Donald Trump during the campaign and at the Bitcoin 2024 conference in Nashville, promised Establishing a Bitcoin strategic reserve in the United States. He even suggested that some of the U.S. debt may be “paid off” with Bitcoin.
David Bailey, CEO of BTC Inc and advisor to the Trump team, stressed the urgency of the move on Building a strategic reserve of Bitcoin must be a national priority within the first 100 days. We need an aggressive plan to increase U.S. proportional ownership of the Bitcoin supply.”
What happened couldn’t be clearer.
Building a strategic reserve of Bitcoin must become a national priority during the first 100 days of the Trump administration. We need an aggressive plan to increase the U.S.’s proportional ownership of the Bitcoin supply. https://t.co/a85wLNoXSS
— David Bailey🇵🇷 $0.85mm/btc is the floor (@DavidFBailey) December 4, 2024
#3 Strong spot demand and institutional interest
Strong spot market activity and heavy institutional participation underpinned the surge. According to statistics, open interest in Bitcoin futures surged by more than $4 billion during the rally data Provided by Coinalyze. Funding rates have also reached unprecedented levels, exceeding the peak two weeks ago when Bitcoin first hit $99,500.
Importantly, this rally was driven by the spot market and not just derivatives speculation, suggesting healthy and sustained demand. The infamous $100,000 “long sell wall” that had previously stymied the rise was decisively breached on the second try.
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Market analysts speculate that major players like Michael Saylor could be behind the intense buying pressure. especially, Mara HoldingsInc., the largest publicly traded Bitcoin mining company by market capitalization, recently raised $850 million through the issuance of zero-coupon convertible senior notes due 2031. Although unconfirmed, there is a strong possibility that MARA will increase in price.
CryptoQuant reported supporting this view: “Bitcoin tops $100,000 as institutional demand drives market. Coinbase Premium Index highlights continued buying pressure from U.S. investors.”
#4 Incredible Retail Market
Despite the bullish momentum, retail traders appear to be in a state of disbelief. On-chain analytics firm Santiment observed that while whale accumulation continues to strengthen, retail sentiment remains cautious.
“As whale accumulation looks to continue to be strong, the only thing standing in the way of $100,000 Bitcoin making history is the excitement among retail traders,” Santiment noted. The firm emphasized that concerns about the price in early December followed a historic rise in November. Doubts and expectations of a sharp correction are growing. However, the current social media landscape reflects “trader hesitancy and uncertainty,” with a high ratio of negative to positive comments.
Santiment added: “There have been plenty of signs over the years that the cryptocurrency market is moving in the opposite direction to popular expectations, and we should be encouraged by the FUD and high profit-taking by other traders.” “At this level, bulls and There may be more battles among the bears, but as long as major stakeholders continue to collect more and more Bitcoins, we could see the long-awaited milestone achieved soon.”
At press time, BTC was trading at $102,681.
Featured image created using DALL.E, chart from TradingView.com
