In summary
- The crypto market reached highs for months, with global capitalization approaching $3 trillion.
- Trump’s victory and Republican control of the Senate boosted optimism in the market in anticipation of favorable crypto policies.
- Geopolitical and economic risks could interrupt the bullish streak towards the beginning of 2025, according to analysts.
The Cryptocurrency market is back in full swing, with multiple digital assets breaking highs not seen in months, while the benchmark asset Bitcoin continues to set new records.
The industry’s total market capitalization is rapidly approaching the $3 trillion mark, the highest level reached during the peak of the last major bull cycle on November 9, 2021.
But are these the first signs of a sustainable rally?
Backed by several tailwinds, including President-elect Donald Trump’s victory, strong corporate results among stocks overall and stronger consumer sentiment, market momentum appears strong, according to some analysts.
“We believe this bull run is just beginning,” Ryan McMillin, chief investment officer at cryptocurrency fund Merkle Tree Capital, told Decrypt. “Since the election uncertainty was lifted last week, we have hit a new all-time high every day, and for good reason.”
Trump’s “red sweep” last week, which included a majority Republican victory in the Senate, has contributed to optimism that the former president’s party will encounter little resistance to passing industry-friendly legislation.
During the campaign, Trump made several promises to cryptocurrency advocates, including establishing a Bitcoin reserve, protecting the interests of American miners, encouraging favorable policies, and establishing a cryptocurrency council to oversee his implementation.
“We are currently in a seasonal sweet spot for cryptocurrencies, with the post-election bull run expected to extend into January,” Jamie Coutts, chief cryptocurrency analyst at Real Vision, told Decrypt. “The investment horizon is crucial: in the next 9 to 12 months, the cryptocurrency market is poised for significant growth.”
Whether or not high prices can be sustained into next year largely depends on several external factors, according to Jehan Chu, co-founder and managing partner of Hong Kong venture capital firm Kenetic.
“While this bull run has just begun and should extend beyond the inauguration, each past cycle has taught us that all good things must come to an end,” Chu told Decrypt.
He pointed to geopolitical risks in the Middle East and Eastern Europe, massive US debt and potential climate disasters as possible catalysts to ruin the party.
“Barring some major catastrophe, I expect the market’s sugar rush to run out in the first quarter with a moderate correction followed by more sugar,” he added.
Like Real Vision analyst Coutts, McMillin also agrees and predicts at least a one-year window in which cryptocurrency prices could rise.
“A $100,000 price tag by the end of the year is very much in play,” McMillin added. “We hope that record ETF inflows continue, that FTX cash distributions are recycled directly back to the market, and that the U.S. Securities and Exchange Commission is friendly or at least impartial.”
For Coutts, risks arise if the MOVE index, which signals bond market volatility, rises above 130, the 10-year US Treasury yield exceeds 4.5% or the DXY exceeds 105.5, reflecting a stronger dollar.
Currently, the MOVE index is at 98.85, the 10-year Treasury yield is at 4.31%, and the DXY is approaching its critical level of 104.95.
That could deter investments in cryptocurrencies if those markers are crossed, Coutts warned.
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