Bitcoin rises to 89.5k – Is 100k the next target?

• Trump’s won a strong mandate and platform to deregulate crypto.  

• Institutional investors are increasingly involved in Bitcoin. 

• Retail investors are starting to return. 

• US CPI & Fed speakers are scheduled this week. 

• Bitcoin is overbought on multiple timeframes.  

Trump's victory in the US presidential election, combined with the Republicans winning the Senate and being on track to take the House of Representatives, has resulted in a euphoric reaction across the cryptocurrency market.  

The world’s largest cryptocurrency rose 10% over the past 24 hours, hitting a record high of 89.5k, and has already booked gains of over 25% since Election Day. Bitcoin’s market cap has reached $1.75 trillion, securing its position as the world’s 8th largest asset, surpassing Silver. 

Trump’s deregulation and institutional investment 

Trump has won a strong mandate and platform to implement his policies. The prospect of crypto-friendly policies and deregulation at a time when institutional investors are increasingly involved has helped Bitcoin break multiple records. 

In addition to the US elections, the Fed cut rates by 25 basis points and is expected to cut rates again in December. A lower interest rate environment also benefits risk assets such as Bitcoin. Fed Chair Powell also alluded to a different pace for rate cuts should Trump’s policies be inflationary. Still, the optimism of a crypto-friendly Trump administration has more than offset any concerns over a higher neutral rate from the Fed. 

The macro-environment for crypto over the coming quarters is expected to be supportive, thanks to the Fed easing monetary policy and stronger U.S. economic conditions. Furthermore, a Trump administration pledging to increase deficit spending while deregulating will likely be a win-win for the crypto sector. 

BTC ETFs reach record levels 

With a compelling macro backdrop, Bitcoin ETF inflows surged by $1.63 billion last week, marking a fifth week of inflows. On Thursday, November 6th, BTC ETF inflows reached $1.3 billion, a record high. BlackRock’s IBIT has been the principal benefactor, with inflows of over $27 million since its launch in January, making it the fourth-best-performing fund globally in terms of flows this year. 

Retail investors are starting to return

While surging ETF inflows point to strong institutional participation, retail investors are also starting to return amid FOMO. According to Santiment data, social media mentions of Bitcoin have surged 65% over the past 24 hours and are up 58% over the past week. Meanwhile, Google Trends revealed an increase in crypto-related searches, pointing to retail investors' gradual return. However, this recent increase is still below the search volumes reached in previous peaks, suggesting there could be more room for the rally to run. 

Risks ahead 

Rallies rarely go up in straight lines. Fundamentally, this week's event risks are from US inflation data tomorrow, which is expected to rise, and from Fed speakers, including Fed Chair Jerome Powell, scheduled to speak this week. Should the Fed start to adopt a more cautious approach toward rate cuts, risk assets, including Bitcoin, could come under pressure. 

Where next for Bitcoin – Technical analysis 

BTC/USD extends its breakout from the 7-month descending channel, pushing above 80k, the psychological level, reaching a record high of 89.5k. The RSI is in overbought territory on multiple timeframes, so a period of consolidation or a move lower could be on the cards. 

Buyers will look to rise above 90k to 100k as the next logical target. 

Minor support can be seen at 80k, the round number ahead of 73,750, the previous ATH. A break below here negates the near-term trend. A break below 67k creates a lower low.

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