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In summary
- Bitcoin surpassed $97,000, breaking previous records and approaching the six-figure threshold.
- The futures market shows stability with financing rates around 10%, far from overheating levels.
- The approval of ETFs and the “Trump Trade” boosted positive sentiment in financial markets.
Bitcoin continues to set new records this year as traders begin to eye a six-figure price for the world’s largest Cryptocurrency, and according to derivatives market analysis of the asset, it hasn’t overheated yet.
The asset rose well beyond $97,000 on Wednesday night, surpassing its previous highs above $95,000 in less than an hour, according to data from CoinGecko.
Its swinging price has triggered a $100 million cascade of liquidations in the last 24 hours, with 80% of these coming from short sellers, those who were betting the price would fall, according to data from CoinGlass.
Volatility has returned significantly this year, thanks in part to multiple listings of exchange-traded funds (ETFs) in the US in January and the start of options trading in those products this week.
A Republican victory during this year’s US presidential election has also raised hopes for industry-friendly regulation and a loosening of oversight by Wall Street’s top regulator, the Securities and Exchange Commission, with an expected leadership change.
Dubbed the “Trump Trade,” cryptocurrency and stock traders are scrambling to acquire assets ahead of the President-elect’s inauguration on January 20, which has helped boost sentiment in major markets.
Earlier this month, the Nasdaq rose to its all-time high above 21,180 points, while the S&P 500 surpassed 6,000 for the first time.
That has been driven by post-election optimism, Federal Reserve rate cuts and strong corporate earnings, especially in the technology sector. Advances in AI and favorable economic conditions have further boosted investor sentiment, driving indices to new peaks.
Bitcoin is on track to surpass analyst expectations for a December price above $100,000, with Bernstein Research forecasting the asset could double to $200,000 by the end of 2025.
“If you just look at the scale and speed of the market, the knee-jerk reaction would be that investors are in a state of euphoria,” Pav Hundal, principal analyst at Australian cryptocurrency exchange Swyftx, told Decrypt.
“There are no signs of overheating in the futures market,” he added. “It all seems very rational, very deliberate.”
The analyst noted Bitcoin’s funding rate for perpetual contracts, which “currently sits around 10%.”
“That’s nowhere near overheated, and certainly nowhere near the 107% annualized interest rate we saw on Bitcoin longs in March,” he said. “We should have a pretty clear idea in the next few hours if this is the final push toward $100,000.”
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