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Bitcoin shattered previous records, surpassing the $100,000 milestone for the first time to hit an all-time high of $104,088 on Wednesday night in New York. The flagship cryptocurrency reached $94,587 on Wednesday but made a remarkable comeback. There are several key factors that contributed to this unprecedented operation:
#1 Fed Chairman Powell Compares Bitcoin to Gold
In a key note from the traditional financial sector, Federal Reserve Chairman Jerome Powell discussed Bitcoin during the New York Times DealBook Conference. When asked about the perception of Bitcoin as a sign of faith or lack thereof in the US dollar and the Federal Reserve, Powell offered a different view.
“I don’t think that’s the way people think about it,” Powell noted. “People are using Bitcoin as a speculative asset, right? It’s like gold. It’s like gold, only visible. It’s digital. People don’t use it as a form of payment or as a store of value. It is very flexible. It is not a dollar competitor; it really is a gold contender.”
This comparison to gold, a common store of value, was probably seen by many as another strong endorsement of Bitcoin in the financial ecosystem.
If your central bank owns gold, but rejects digital gold… they are done. How did the bet against digitization work out for kodak, blockbuster, sears, yellow pages, news papers, taxis, postal service, libraries, travel agents, etc?
The most obvious trade in history
— David Bailey🇵🇷 $0.85mm/btc down (@DavidFBailey) December 4, 2024
#2 Russia’s Putin Shows Openness To Bitcoin
Adding to this momentum, Russian President Vladimir Putin made comments during the Russia Calling forum that many interpreted as an endorsement of Bitcoin.
“Who can block Bitcoin? There is none,” said Putin. “And who can prevent the use of electronic payment methods? There is no. Because this is new technology. And no matter what happens to the dollar, these tools will improve in some way because everyone will strive to reduce costs and increase reliability.”
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The background to Putin’s comments included speculation about a coming “Bitcoin Space Race” between the world’s superpowers. President-elect Donald Trump, during his election campaign and at the Bitcoin 2024 conference in Nashville, promised to establish a Strategic Bitcoin Reserve in the United States. He even suggested that part of the US debt could be “paid off” with Bitcoin.
David Bailey, CEO of BTC Inc and advisor to Trump’s team, emphasized the urgency of this plan to X: “The Bitcoin Space Race is here. […] It was not clear what was going on. It must be a national priority to stop the Strategic Bitcoin Reserve in the first 100 days of the Trump administration. We need a strong plan to increase the USA’s equal ownership of the Bitcoin supply.”
It was not clear what was going on.
It must be a national priority to stop the Strategic Bitcoin Reserve in the first 100 days of the Trump administration. We need a strong plan to increase the USA’s equal ownership of the Bitcoin supply.
— David Bailey🇵🇷 $0.85mm/btc down (@DavidFBailey) December 4, 2024
#3 Strong Local Need and Institutional Interest
This growth is supported by strong market activity and significant institutional participation. During the boom, open interest in Bitcoin futures rose to more than $4 billion, according to Coinalyze data. The level of funding has also reached unprecedented levels, surpassing the peaks seen two weeks ago when Bitcoin first hit $99,500.
Importantly, this rally was driven by existing markets and not just speculation, indicating healthy and ongoing demand. The infamous “Great Sell Wall” worth $100,000, which had previously resisted going up, was completely breached on the second attempt.
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Market analysts think that big players like Michael Saylor may have been the cause of the huge buying pressure. Notably, MARA Holdings, Inc., the largest publicly traded Bitcoin mining company by market capitalization, recently raised $850 million in an offering of zero-convertible senior notes due 2031. Although not guaranteed, there is a strong possibility that MARA will use these funds to support Bitcoin during price increases.
Supporting this view, CryptoQuant reported: “Bitcoin surpasses $100k as institutional demand drives the market. Coinbase Premium Index highlights continued buying pressure from American investors.”
#4 The Unbelievable Retail Market
Despite the bullish momentum, traders seem to be in a state of disbelief. On-chain analytics firm Santiment noted that while the whale accumulation continues to strengthen, retail sentiment remains cautious.
Santiment noted: “As the whale rally continues to look strong, the only thing holding back the $100K BTC record is the excitement of retail traders.” The company highlighted that at the beginning of December there was increasing skepticism and expectations of a significant price reversal following the historic gains of November. However, the current state of social media shows “skepticism and uncertainty from traders,” with a range of negative to positive comments.
“Given many indications over the years that crypto markets are moving in the opposite direction to what the crowd expected, we should feel encouraged by trader FUD and high profit taking,” added Santiment. “There may be more of a battle between bulls and bears at this level, but we can see the long-awaited milestone come to fruition very soon as long as key stakeholders continue to accumulate more BTC.”
At press time, BTC traded at $102,681.
The featured image was created with DALL.E, a chart from TradingView.com