Bitcoin continues to outperform and explore unchartered territory

Why the sudden surge in demand for Bitcoin and many other major Digital Currencies?

Trump trade

In addition to institutional demand, the US Federal Reserve’s rate reductions (and forecasts of further policy easing), I am largely putting the latest rally down to Donald Trump’s election win.

Trump’s pro-business stance and promises of tax cuts and deregulation have contributed to what is now commonly referred to in the investment community as ‘the Trump Trade’.

Despite expressing uncertainty and scepticism regarding the Cryptocurrency market during his first term as president, during his presidential campaign earlier this year, Trump declared his desire for the US to be ‘the crypto capital of the planet’. Among Trump’s promises to the Crypto community are plans to fire SEC (Securities and Exchange Commission), Chair Gary Gensler, launch a national Crypto stockpile and support all future Bitcoin mining in the US. This shift in focus has led to notable gains in Crypto mining stocks, such as Riot Platforms (RIOT) and Mara Holdings (MARA).

Remarkably, the price of Bitcoin has rallied nearly 30% versus the US dollar (USD) since Trump’s election win The Cryptocurrency’s value has more than doubled in price year to date (in fact, BTC/USD is up 110% as of writing) and recently clocked record highs of US$90,000. Ethereum (ETH), the second largest Digital Currency behind Bitcoin, is up 43% year to date, along with Dogecoin, rallying a monstrous 330% against the USD year to date.

Alongside the rise of digital currencies venturing into uncharted territory, major US equity indices have also pencilled in record highs. The S&P 500, Nasdaq 100 and the Dow Jones Industrial Average are up 5.2%, 6.1%, and 6.0% month to date, respectively. With Elon Musk rumoured to play a meaningful role in Trump's administration, there is an anticipation that Tesla (TSLA) will benefit from a more favourable regulatory and policy environment. As a result, Tesla has gained significant traction in recent weeks, rising 40% month to date and is fast approaching its all-time high of $414.50.

Will BTC continue to outperform?

With BTC/USD hovering a touch south of record highs, a number of analysts are expecting the major Crypto pairing to reach US$100,000 before Trump’s inauguration in January next year.

‘Everyone is focused on new people buying bitcoin. That's very real. But an equal part of this rally is that people have stopped selling. Long-term owners are no longer willing to part with bitcoin below $100k, and short-sellers don't want to step in front of a freight train’, said Matt Hougan, CIO of Bitwise.

Founder and CEO of the deVere Group Nigel Green recently commented: ‘We expect that this is just the beginning, with the cryptocurrency set to break more records under an incoming Trump administration’.

Google Trends also reported increased search volume for Bitcoin following Trump’s win. Terms such as ‘Bitcoin ATH’ have experienced an 850% surge in search volume, along with a 650% increase for the question: ‘Why is bitcoin going up’?

From a technical standpoint, US$100,000 is in sight on the monthly scale and I feel is certainly achievable. Albeit resistance is unclear at this point, support targets to be aware of in the event of a correction include US$73,888 and one much lower on the curve around US$51,948. However, if the unit makes it as far south as the latter support, I would be concerned for bulls as, in my opinion, this could reflect a major change in market sentiment.

Across the page on the daily timeframe, support can be seen in the form of a rising window (a gap opening to the upside) between US$77,331 and US$79,837. Should a correction unfold from current levels, this would be the first port of call in terms of logical support. The area gains additional weight from the neighbouring channel resistance-turned potential support line, extended from the high of US$65,040.