Bitcoin has been on a tear lately, bringing its YTD returns to over 112%. Much of this gain can be attributed to Donald Trump’s support of bitcoin and his electoral victory, which added to an already bullish period for Bitcoin.
Now, the big question is whether the benchmark cryptocurrency could cross the $100,000 mark for the first time in the near future. So high is bitcoin headed?
Key Points
- Bitcoin’s 112% YTD rally, fueled by Trump’s pro-crypto stance and advisors like Elon Musk, has pushed prices past $92,000 with speculation about reaching $100,000.
- Strong demand from institutional investors and Bitcoin ETFs continues to stabilize prices and drive growth.
- Proposals for a U.S. Bitcoin reserve and rising debt concerns position Bitcoin as a hedge, with reduced supply likely boosting prices further.
A Look at Bitcoin’s Post-election Rally
Bitcoin was one of the main beneficiaries of a post-election rally that has also significantly lifted the prices of US stocks. On November 5th, the day before the election, Bitcoin peaked at $70,523. Just one week later, the digital currency had risen by about 23.6% to over $87,200.
While both candidates were more likely to be friendly to crypto than past administrations had been, Trump’s win was seen as a massive victory for digital currencies.
As a candidate, Trump promised a more pro-crypto regulatory framework and made a specific commitment to remove SEC Chairman Gary Gensler.
Under Gensler, the SEC has won a string of notable legal victories over the cryptocurrency industry. Trump even went so far as to suggest a national cryptocurrency reserve while on the campaign trail.
Just as important as Trump’s own commitment in driving the crypto rally are the pro-crypto advisors he has surrounded himself with. By far the most notable of these is Tesla CEO Elon Musk, a famous proponent of digital currencies.
Musk played a major role in Trump’s election and is now influencing his staffing picks as the president-elect prepares his transition team. Musk’s ability to influence crypto policy has also caused Dogecoin to surge by more than 100% since election day, not least because the Tesla CEO has famously backed this cryptocurrency and even accepts it as payment for Tesla vehicles.
With that said, Bitcoin may be approaching the edge of its current run. On Monday, prices flirted with the $90,000 mark before retreating slightly on Tuesday but by Wednesday they had climbed above $92,000. This initial pause was hardly surprising when one considers how much the cryptocurrency had gained in the last week alone.
Now that it’s on the run again, the real question for crypto traders now is whether Bitcoin still has enough gas left in its tank to reach $100,000.
Are There Still Tailwinds Behind Bitcoin?
Even beyond the post-election news cycle, Bitcoin still appears to have significant structural tailwinds that could propel its price higher over time.
The advent of Bitcoin ETFs has made it vastly easier for retail investors to buy into the cryptocurrency. Driven in part by the post-election trading frenzy, these ETFs are expected to overtake the total value of gold ETFs early next year.
Institutional investors have also provided a great deal of price support for Bitcoin over the last year. In August, for example, a volatile market week caused Bitcoin prices to fall by nearly 30%.
Institutional buyers, however, stepped in and begun buying. This alleviated some of the downward pressure on prices. As long as large buyers continue to remain bullish on Bitcoin, it seems likely that demand will continue to drive prices steadily higher.
If enacted, Trump’s strategic crypto reserve could also add enormous new pressures to the demand side of Bitcoin’s price equation.
Though specifics on Trump’s plan haven’t been released yet, an early model for the effort may be found in a Congressional act proposed earlier this year by Republican Senator Cythnia Lummis. Under that act, dubbed the Bitcoin Act, the US would create a strategic reserve of 1 million Bitcoin over a five year period.
With about 19.8 million Bitcoin in existence today, a reserve of this magnitude would require the US to commit to buying over 5% of all current Bitcoin.
Furthermore, the reserve would likely remain illiquid, effectively removing a sizeable chunk of Bitcoin from circulation permanently. This would almost certainly support higher prices, especially if other countries eventually begin to follow suit.
Some have even speculated that even if the US does attempt to store 1,000,000 Bitcoin as a reserve asset that the odds of it succeeding are low because game theory will take effect where a race by other countries will follow suit leading to the price of Bitcoin surging.
A final piece of the puzzle when it comes to Bitcoin’s outlook is the ongoing concern around the growing US debt load. Now over $35 trillion and still growing, America’s debt is beginning to raise red flags among economists and investors.
Indeed, Trump’s own spending plans are expected to add about $4.1 trillion of further debt over the coming 10 years. Over time, this exploding debt is likely to hinder economic growth and potentially spur inflation.
While a debt crisis in America would likely be disastrous from an economic perspective, many are looking at Bitcoin as a possible hedge against such an eventuality. Blackrock, for instance, has specifically called Bitcoin out as a decentralized option that could protect against instability among fiat currencies.
While Bitcoin’s volatility may not make it as attractive as traditional hedges like gold, the continued expansion of government debt is likely to support further buying.
So, Will Bitcoin Hit $100,000?
According to Max Keiser, little supply of Bitcoin sales existed above $74,000 and so the odds of the cryptocurrency hitting $100,000 are very high.
At this point, Bitcoin reaching the six-figure mark seems to be much more a question of when than a question of if. Even with the post-election rally taking a bit of a break, it’s relatively clear that the market is in a bullish mood when it comes to Bitcoin and that demand is unlikely to unwind in the near future.
Indeed, there are several conceivable catalysts that could push Bitcoin over the $100,000 threshold. Musk being given a formal role in the upcoming Trump administration, for example, could put an infamous crypto bull within daily earshot of the president and trigger a further rally.
Likewise, Trump releasing more concrete details about his strategic reserve plan could cause the market to price in additional demand. This is particularly true if Trump’s allies in Congress present a formal and viable plan for the creation of such a reserve.
Even without a specific news-driven event, though, it seems likely that Bitcoin could hit $100,000 in the relatively near future. Continued inflows into Bitcoin ETFs and ongoing institutional buying could both steadily keep prices moving higher. From where we are now, it seems very likely that Bitcoin will rise above $100,000 in the next year, if not sooner.