Bitcoin’s value will likely hit $100,000 per coin on the back of the recent rally following Donald Trump’s victory in the U.S. elections, even if its future beyond the key landmark figure remains uncertain, according to crypto investors speaking to MarketWatch.
Donald Trump gives a keynote speech on the third day of the Bitcoin 2024 conference at Music City Center July 27, 2024 in Nashville, Tennessee. Bitcoin’s value surged following Trump’s victory in the U.S. elections.
The sharp surge in bitcoin’s value in the immediate aftermath of the U.S. elections was largely driven by optimism surrounding pro-crypto policy pledges Trump made on the campaign trail, including promises to create a national strategic bitcoin reserve.
Excitement surrounding Trump’s plans to install a pro-crypto candidate to replace Gary Gensler as the new chair of the U.S. Securities and Exchange Commission (SEC) also helped fuel the heavy inflows into crypto exchange traded funds (ETFs) that followed Nov. 5.
Bohan Jiang, head of OTC options trading at digital assets broker Afra, noted that in the runup to the elections, hedge funds and crypto traders were largely erring on the side of caution by ensuring they were “well hedged for a Harris win.”
Jiang explained that the surge in bitcoin’s value in the immediate wake of the vote was driven by traders repositioning their portfolios to go long on crypto assets in movements that saw investors unwind their hedges and buy up bitcoin at spot prices.
“We basically had the best outcome for crypto, which was essentially a red sweep. That was interpreted as very bullish for crypto, particularly in terms of regulatory clarity,” Jiang said.
Mitchell Dong, founder and managing member of crypto hedge fund Pythagoras Investments, noted the launch of bitcoin ETFs on U.S. markets in January 2024 helped “enhance” the recent rally in allowing for much greater inflows into crypto markets from institutional investors.
In Dong’s view, the bitcoin bull market could now be on course to continue as Trump pushes forwards with plans to bring his pro-crypto policies into force, including by offering greater regulatory clarity to the U.S. crypto industry.
“In terms of outlook, I think it’s going to continue to be a bull market as Trump tries to implement his campaign promises,” Dong said, as he suggested bitcoin could receive a major boost from greater regulatory clarity.
The hedge fund manager, however, warned that investors should expect to see high levels of volatility in crypto markets, whatever happens.
Jiang suggested greater levels of regulatory clarity could be provided over the coming months, as he argued any such move would likely result in “massive inflows of capital into the digital asset ecosystem” from institutional investors.
Looking ahead, Jiang, nonetheless, warned bitcoin markets could still be shaken by various shocks, including those related to macroeconomics, geopolitics, and even the performance of major bitcoin investor MicroStrategy Incorporated, which has helped drive the bitcoin surge.
MicroStrategy, which is now one of the largest owners of bitcoin in the world, has played a part in fueling the recent crypto rally via an ongoing “feedback loop” that has seen it leverage increases in its stock price to buy bitcoin, Jiang explained
The Nasdaq-listed technology business currently owns more than $30 billion worth of bitcoin, having first started investing heavily in the cryptocurrency in 2020 when the price of a single bitcoin was below $12,000.
MicroStrategy has over the past four years used various methods to fund its bitcoin purchases including equity sales and debt raises, via a strategy that has seen its own share price surge by more than 3,000% since it made its first major bitcoin investment in August 2020.
In Jiang’s view, the situation has fueled a “reflexive rally” through which increases in MicroStrategy’s share price have driven up the price of bitcoin in allowing the U.S. tech company to buy more of the cryptocurrency.
MicroStrategy is now planning to raise another $42 billion in new capital to buy bitcoin over the next three years, according to a recent announcement from the company this week.
Any reversal of the dynamic that has helped fuel MicroStrategy’s rise would have a major impact on bitcoin’s value in removing a key provider of liquidity from the market that has helped push up the price of the cryptocurrency, Jiang said.
Market participants now expect bitcoin will hit the psychologically significant landmark price of $100,000 per coin in a continuation of the rally that has seen the price of bitcoin increase 46% over the previous month. “The market wants it, it’s a very big psychological thing,” Jiang said.
Jiang, however, warned that beyond the $100,000 mark, there’s still significant uncertainty surrounding bitcoin’s future trajectory. “I’ve heard price targets of anything from $120,000 to $200,000 by 2026. Afra’s view is much more nuanced,” he said.
“More drama and more adventure is our outlook,” Dong added, as he suggested crypto markets have always had to deal with high levels of volatility. “Every day you wake up to an adventure, every week is a new drama, and every month is like a paradigm shift,” he said.
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