Beyond Speculation: Bitcoin's Historic Rally Under A Pro-Crypto Political Climate

Bitcoin’s rally this week is echoing through conversations and aspirations worldwide, with its 2024 new ATH climbing from $75,000 to $89,000 following Donald Trump’s re-election and a Republican win in Congress. As a pro-crypto sentiment sweeps the U.S. political landscape, Bitcoin, the world’s largest cryptocurrency, is drawing unprecedented interest from both retail and institutional investors. Many are watching closely to see how the new U.S. administration could shape the digital economy.

A Political Catalyst For Bitcoin's New Highs

The momentum for Bitcoin’s latest rally kicked off as Trump’s re-election win grew likely, driving the price to $75,000 on Election Day (November 5, 2024). Bitcoin continued its ascent afterwards by breaking past $80,000 on November 10 and reaching a new all-time high of $82,000 and later to $84,000, $85,000, $88,000, and even $89,000 on November 11. This surge is seen as a response to Trump’s campaign promises: creating a national crypto stockpile, easing crypto regulations, and fostering a crypto-friendly economic environment, among others. Such pledges have bolstered optimism that Bitcoin could take on a more significant role within the U.S. economic policy and potentially be viewed as "digital gold."

Crypto election updates. Source: standwithcrypto.org

The victory of a pro-crypto president and Congress was further supported by a Federal Reserve rate cut on November 7. Lower interest rates typically benefit risk assets, and in this case, the cuts have worked in tandem with Bitcoin’s rally. With cheaper borrowing, investors are increasingly turning to alternative assets, like Bitcoin, as a store of value and inflation hedge. The unique economic backdrop of pro-crypto politics coupled with monetary easing has created conditions that may fuel Bitcoin’s growth further as confidence builds around its long-term position in the financial landscape. Polymarket shows the sentiment that nearly $3 million in volume feeds into the "Bitcoin to $90K" notion, there's 66% chance that Bitcoin will reach $95,000 and 31% is confident about the $105,000 mark in November 2024.

$12 million in volume for Bitcoin's new highs bets (as of November 12, 2024). Source: Polymarket

Institutional Bets And Futures Market Optimism

The enthusiasm in the Bitcoin spot market has extended into the futures and derivatives markets, where record-breaking activity reveals the strength of investor optimism. Open interest in Bitcoin futures has soared, with many betting on a rise to $90,000 in the near term. Futures premiums have also jumped from 7% to around 14%, signaling that investors are willing to pay a higher price for future Bitcoin contracts, reflecting robust confidence in continued price gains.

The options market tells a similar story, with a surge in open interest for Bitcoin “call options”—contracts that give investors the option to buy Bitcoin at a later date. This uptick underscores a strong expectation that Bitcoin’s upward momentum will continue. The CME exchange, a leading U.S. derivatives market, has experienced a notable rise in Bitcoin futures demand, with premiums highlighting a persistent bullish sentiment. Together, these movements in the futures and options markets indicate that the belief in Bitcoin’s potential isn’t fleeting but instead represents a longer-term outlook driven by strategic bets and structured optimism.

Premium between Bitcoin futures and spot prices surges. Source: Vetle Lunde/K33 Research

Institutional Support Brings Bitcoin Into The Mainstream

As retail and institutional investors pour into Bitcoin, its market presence continues to expand, with Bitcoin spot ETFs now exceeding a total market cap of $80 billion. BlackRock’s spot Bitcoin ETF, in particular, has seen record inflows, now surpassing the value of its longstanding gold ETF - an unprecedented shift that highlights a growing institutional confidence in Bitcoin as a store of value. This surge in confidence has also lifted crypto-related companies like Coinbase and Robinhood, whose stock prices rose 40% and 27%, respectively, following the election. Pro-crypto policies anticipated under the Trump administration have bolstered support for these companies, signaling what could be a golden age for crypto-related stocks and assets. At the new high of $89K, Bitcoin already surpassed silver to, again, become the 8th largest asset in the world.

BlackRock's Bitcoin ETF surpasses its Gold ETF in assets. Source: Bloomberg

Under the new administration, a departure from restrictive crypto regulations appears likely and is on its way to set a foundation for sustained growth in the digital asset market. This rally may well be more than a temporary peak; it suggests that Bitcoin’s role in the financial landscape could be undergoing a fundamental evolution. With political and economic forces aligned, the question is not merely if Bitcoin can reach new heights (such as $100,000) but how quickly it might achieve them. Furthermore, Trump’s proposed national Bitcoin reserve plan, which would use seized Bitcoin as a treasury asset, introduces a tantalising potential for further growth. Should the U.S. establish this reserve, Bitcoin’s position as a digital store of value could reach unparallel levels to add yet another layer of support to the long-term bullish outlook.

Disclaimer: The opinions expressed in this article are for informational purposes only. This article does not constitute an endorsement of any of the products and services discussed or investment, financial, or trading advice. Qualified professionals should be consulted prior to making financial decisions.