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What you need to know
- Bitcoin reached a new high of $98,000 on Thursday.
- This is a 46% rise since Donald Trump won the U.S. Presidential election in 2024.
- On Wednesday, Bitcoin-related stocks saw the highest trading volume of their history. More than $50 billion worth of assets were exchanged.
- Three other publicly traded companies announced their intention of using bitcoin as a treasury reserves asset.
- Despite all this activity, Galaxy Digital CEO Mike Novogratz says a correction in bitcoin's price is coming.
- Bitcoin’s correlation with gold has also shifted this month from being highly correlated to an inverse relationship.
Bitcoin (BTCUSD), which briefly broke the $99,000 mark on Thursday, set a new record. This is because investors of all sizes can’t stop buying cryptocurrency.
The biggest cryptocurrency by market cap has seen its value more than double this year. It is up over 130% since the beginning of the year and now it’s within striking distance to reach $100,000. A year ago, when it was trading at close to $37,000, that level would have been unthinkable.
The price of bitcoin has risen by 46% since Donald Trump won the U.S. presidential elections earlier this month.
Investors also cheered Thursday’s announcement of the departure of U.S. Securities and Exchange Commission Chairman Gary Gensler. Gensler’s enforcement approach was criticised by the crypto-industry.
Investors Bitcoin-Hungry Fuel Price Rally
Bitcoin has attracted the attention of investors both retail and institution.
The flow of funds into exchange-traded bitcoin funds (ETFs), which hold the cryptocurrency, has also been breaking records in the last few days. These products buy bitcoin as investors pour more money into them. This drives bitcoin prices up.
These products are not just popular among retail investors. According to data analyzed by Coinbase, more institutional investors—such as hedge funds and investment advisers—bought into spot bitcoin ETFs in the third quarter than in the previous one.
Wall Street is also awash with massive trading of bitcoin-related stocks.
Bloomberg Senior ETF analyst Eric Balchunas describes what he calls the “the” “Bitcoin Industrial Complex,” On Wednesday, a group of publicly traded companies or ETFs directly or indirectly exposed to bitcoin’s price recorded a trading volume of $50 billion. MicroStrategy’s (MSTR), a company that shifted to a bitcoin acquisition strategy in 2020, had recently stock trading volumes comparable with those of Tesla (TSLA), Nvidia (NVDA) and others.
MicroStrategy has more than 331 2000 bitcoins worth over $32 billion in its books. The company’s shares have risen by more than 500% so far this year. This has led many other publicly traded companies, including Google and Facebook, to follow MicroStrategy’s lead.
While bitcoin miner Marathon Holdings (MARA) and health-care company Semler Scientific (SMLR) have done that in the past, Cosmos Health (COSM), LQR House (LQR), and Acurx Pharmaceuticals (ACXP) all made announcements about bitcoin purchases this week.
There is a $100K Correction in Sight but it may not be the end.
It may not take long for bitcoin to reach the $100K milestone, but some experts think that it may not last too long.
Mike Novogratz (CEO of Galaxy Digital) warned in a CNBC interview on Thursday that, despite the interest from the institutions, a correction would be coming. “The crypto community is levered to the gills, and so there will be a correction,” Novogratz said.
He expects bitcoin's price to fall to $80,000 levels, which would represent a 20% drop from the $100,000 mark.
Bitcoin Breaks Free of Gold Correlation
Bitcoin was originally viewed by its creators as a decoupled investment from the stock market. “digital gold.” When the stock markets are turbulent, gold is often seen as a safe asset.
Gold has been slipping in recent months, and some experts are suggesting that gold should be replaced by bitcoin.
The Block data shows that the 30-day Pearson correlation between bitcoin and gold has dropped from 0.82 to a negative value of 0.66 since November 5, when the U.S. election took place.
In a few weeks, bitcoin and gold went from being highly correlated to an inverse correlation. That said, bitcoin is still highly correlated with the stock market, maintaining Pearson correlation scores of 0.7 and 0.76 with the S&P 500 and the Nasdaq as of Wednesday.
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