[UNITED STATES] Bitcoin regained $96,000 on Wednesday, following a drop from record levels earlier in the week. Coin Metrics reported an almost 6% increase in the price of the flagship cryptocurrency to $96,676.70, while ether increased by over 9% to $3,636.46. The CoinDesk 20 index measures the larger cryptocurrency market, which increased by 7%.
The recent surge in Bitcoin's value has not gone unnoticed by major financial institutions. Several prominent banks have begun to offer cryptocurrency services to their clients, signaling a shift in the traditional finance sector's stance on digital assets. This move towards mainstream adoption has contributed to the increased demand for Bitcoin and other cryptocurrencies, further fueling the current bull run.
Although bitcoin is commonly regarded as a store of wealth and a digital counterpart to gold, the cryptocurrency frequently trades alongside the stock market. On Wednesday, it dissociated from the tech-heavy Nasdaq Composite, which fell 0.6%. The Dow Jones Industrial Average and S&P 500 fell as well.
Coinbase experienced a more than 6% increase due to the rise of bitcoin and other cryptocurrency equities. Robinhood, a cryptocurrency trading platform, increased by 3% as the Trump administration is expected to create a more favorable atmosphere for the industry. MicroStrategy, a proxy for bitcoin, gained 9%.
The anticipation of a more crypto-friendly regulatory environment under the new administration has sparked renewed interest from retail investors. Social media platforms and online forums have seen a surge in discussions about cryptocurrency investments, with many first-time investors looking to capitalize on the current market momentum. This influx of new participants has contributed to the increased trading volume and price volatility observed in recent weeks.
Since the November 5 presidential election, Bitcoin has consistently broken records, rising by approximately 38%. On Friday, it reached a high of $99,849.99 before hitting the $90,000 support level this week.
"The bitcoin bull market has legs," said Alex Thorn, head of firmwide research at Galaxy Digital, in a paper released Wednesday. "There will be corrections and hiccups, which is expected. There may even be some twilight regulatory or law enforcement activities from the outgoing Biden administration that cause market volatility. However, a combination of increased institutional, corporate, and potentially nation-state adoption, a new US government that appears to be very pro-bitcoin, and good positioning and network data all lead to higher prices in the near and medium term."
Environmental concerns surrounding Bitcoin mining have resurfaced amidst the cryptocurrency's meteoric rise. Critics argue that the energy-intensive process of mining Bitcoin contradicts global efforts to combat climate change. In response, several mining companies have announced initiatives to transition towards renewable energy sources, aiming to address these concerns and improve the long-term sustainability of the cryptocurrency industry.
Katie Stockton of Fairlead Strategies said on Monday that, at present levels, bitcoin investors are in "uncharted territory in terms of where there's resistance — which, of course, there is none." Meanwhile, the support is approximately $74,000. Bitcoin hit $92,000 for the first time just two weeks ago, on November 13.
"Bitcoin does tend to stair step both to the downside and to the upside, meaning that it sees these very sharp runups and then consolidates," said the analyst. "People should … be willing to give bitcoin, and the cryptocurrencies in general, more room because of the volatility there and also because of the long-term potential."
The rapid appreciation of Bitcoin's value has reignited discussions about its potential impact on global financial systems. Some economists argue that the cryptocurrency's growing influence could challenge traditional monetary policies and potentially disrupt established financial institutions. Central banks worldwide are closely monitoring these developments, with some exploring the possibility of issuing their own digital currencies to compete with decentralized alternatives like Bitcoin.
Bitcoin is up 126% this year and is still largely predicted to reach $100,000 before the end of the year. Ether, the outperformer since the election, is lagging bitcoin on a year-to-date basis, up 59%.
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