- Bitcoin peaked at $106,000 early Monday morning.
- The new all-time high means Bitcoin is up 150% this year.
- Market observers bet Bitcoin’s price will surge to $120,000 in the next month.
Bitcoin rocketed to a new peak price of $106,000 on Monday ― a 150% surge since the start of the year.
Monday’s price rally followed a brief price consolidation for Bitcoin after it crossed the $100,000 milestone earlier in December.
Petr Kozyakov, CEO of crypto payments platform Mercuryo, said Bitcoin is in “uncharted waters.”
“Bitcoin’s ascent to $106,000 shows that animal spirits are in play as we enter the final weeks of 2024,” Kozyakov told DL News.
The market seems to have established a “psychological support” at $100,000, said Mena Theodoru, co-founder of crypto exchange Coinstash.
With two weeks left in the year, market observers are betting that Bitcoin’s price still has room to grow.
“Bitcoin’s price is being driven up amid expectations of sustained high demand, and several notable news catalysts culminating in a new all-time high,” Shannon Kurtas, head of trading and crypto exchange Kraken, told DL News.
Here are three factors that could pump Bitcoin’s price.
Supply squeeze
Bitcoin is getting scarcer amid massive withdrawals from crypto exchanges.
“Cryptocurrency exchanges are experiencing massive outflows, significantly reducing the availability of Bitcoin on trading platforms,” crypto research platform 10x Research stated in a report on Monday.
“Simultaneously, OTC desks are running low on inventory,” the report said. “Together, these factors indicate a potential squeeze in Bitcoin prices.”
OTC, or over-the-counter, desks are match-makers of sorts between crypto buyers and sellers.
Coinbase, Binance, Bitfinex, and Gemini have all experienced massive Bitcoin outflows in the last week, data from crypto analytics platform Coinglass shows.
Outflows from major centralised exchanges have topped 180,000 Bitcoin since Donald Trump’s election victory last month.
For comparison, only 40,000 Bitcoin was withdrawn from exchanges between late July and November 4, according to Coinglass data.
Trump euphoria
Trump’s election victory and the crypto industry’s prospects under his presidency are still causing a buzz in the market.
The president-elect has promised to create a strategic Bitcoin reserve, a move some market observers say will legitimise the asset.
“If America builds a Bitcoin reserve, this will create a FOMO effect, so we’re likely to see other countries following suit and sovereign wealth funds introducing Bitcoin allocations to the portfolios,” Tim Kravchunovsky, founder and CEO of decentralised network Chirp, told DL News.
As Trump’s inauguration on January 20 nears, there is palpable excitement for Bitcoin and the crypto market.
10x Research predicts that Bitcoin could surge to $120,000 by Trump’s inauguration.
Macro tailwinds
The case for Bitcoin climbing higher might also be boosted by major economies adopting dovish monetary policies.
Bitcoin and crypto have performed well during periods of loose monetary policies in the past.
There’s a 97% chance that the Federal Reserve cutting interest rates to between $4.25 and $4.50 at its December 18 meeting, according to CME Group’s FedWatch tool.
Low interest rates are usually bullish for crypto as it incentivises investors to bet on riskier assets.
The central banks of both Canada and Switzerland recently cut interest rates. The same goes for the European Central Bank.
China already announced a massive $284 billion economic stimulus package in September to spur growth.
Osato Avan-Nomayo is our Nigeria-based DeFi correspondent. He covers DeFi and tech. Got a tip? Please contact him at osato@dlnews.com.