Bitcoin is experiencing a strong price surge, reaching new historical highs of over $88,000 per unit, with a 10% increase in 24 hours and 30% over a week. Analysts believe the cryptocurrency could rise even further, supported by the political context and speculation related to the U.S. presidential election, where Donald Trump was elected. Trump has promised to support the crypto sector and may adopt more favorable regulatory measures, including potentially replacing current SEC Chair Gary Gensler.

This political momentum, combined with interest rate cuts and the possibility of Bitcoin becoming a strategic reserve asset, could push its price to $100,000, according to James Butterfill from CoinShares. Other analysts, such as those at CryptoQuant, predict values could soon reach between $95,000 and $104,000. Additionally, financial institutions like JP Morgan foresee ongoing growth driven by the “Trump trade,” which could last eight weeks, with policies that might increase inflation, reinforcing Bitcoin’s role as an inflation hedge. Even more ambitious forecasts see Bitcoin reaching $200,000 by next year, regardless of Trump’s presidency. These bullish perspectives are widely shared by experts who see substantial growth potential for this digital asset, often referred to as “digital gold.” Everything seems to be going well for the leading cryptocurrency.

Ethereum exchange-traded funds (ETFs) in the U.S. have recorded a record inflow of $295.5 million in a single day, led by Fidelity with $115.5 million and followed by BlackRock with $101.1 million. In just four trading days after Trump’s election victory, Ethereum ETFs accumulated around $513 million in net inflows. Bitcoin ETFs also saw a significant inflow, with $1.1 billion in one day, marking the second time these funds surpassed a billion dollars in a single day. BlackRock leads with $756.5 million, followed by Fidelity with $135 million and ARKB with $108.6 million. The trading volume for these ETFs reached $7.3 billion, the highest since March. Analysts note that increasing confidence in DeFi and Ethereum assets may sustain investment in Ethereum ETFs. These investments now represent approximately 2.4% of Ethereum’s total market cap, showing growing institutional interest in this ecosystem.

BlackRock’s Bitcoin ETF has now surpassed its gold ETF in terms of net assets, an impressive achievement for a product launched only in January, while the gold ETF has existed since 2005. BlackRock’s iShares Bitcoin Trust (IBIT) currently holds $33.17 billion, slightly exceeding the $32.96 billion of its gold equivalent, reinforcing the idea of Bitcoin as “digital gold.” This rapid increase is partly due to Trump’s re-election, which has boosted markets and increased interest in Bitcoin, with a record trading volume of $4.1 billion in one day. Investors hope that Trump will fulfill his promises to support the cryptocurrency industry by easing regulatory restrictions. BlackRock is thus the leader among the 11 Bitcoin ETFs currently offered on Wall Street, its fund far surpassing the next largest, Grayscale’s, which holds approximately $16.79 billion in Bitcoin, or nearly half of BlackRock’s.

Bitcoin has surpassed silver in market cap to become the eighth-largest global asset, reaching a capitalization of $1.75 trillion as its price briefly exceeded $89,000. This growth is largely due to increasing institutional demand and sustained interest in U.S. spot Bitcoin ETFs. In contrast, silver has declined by 6.24% over the past week, while Bitcoin has surged by 30%, reflecting a shift in perception where more traditional investors now view Bitcoin as a store of value rather than a speculative asset.

In terms of market capitalization, Bitcoin is now only surpassed by seven global assets, including gold ($14.7 trillion) and tech giants such as Apple, Microsoft, and Amazon. Although gold remains ten times larger, some analysts point out that this gap highlights both the current value of gold and Bitcoin’s growth potential, reinforcing its appeal as a hedge against traditional market uncertainties. The cryptocurrency market capitalization has reached a peak of $3.1 trillion and could soon surpass France’s GDP. If the crypto market were a country, it would rank eighth in terms of GDP, behind the United States, China, Germany, Japan, India, the United Kingdom, and France.

Salvadoran President Nayib Bukele is publicly celebrating as the country’s Bitcoin reserves show an unrealized profit of $100 million due to the recent surge in Bitcoin’s value. Since adopting Bitcoin as legal tender in 2021, Bukele has continued accumulating the cryptocurrency despite criticism and warnings, notably from the IMF, which feared destabilizing economic impacts. In 2022, some media even labeled this “Bitcoin experiment” a failure, but today, the Bitcoin rally has increased the reserves’ value to $516 million, with an unrealized profit of approximately 20%. El Salvador began its Bitcoin purchases in 2021 at an average price of around $51,000, then continued with regular acquisitions, including a daily buying policy following the FTX collapse when Bitcoin was priced around $16,600. Bukele also launched several Bitcoin initiatives, such as a mining operation using volcanic energy and “volcano bonds.” Despite initial controversy, these efforts seem to resonate with the public, as Bukele was re-elected in February 2023. Today, the country has a potential profit of $100 million from its Bitcoin investments.

Bitcoin’s surge is boosting crypto-related stocks, including Coinbase, whose stock closed at $334.24 on Monday, marking a 20% increase in 24 hours and 84% over the past month. Some analysts forecast a further rise, with the stock potentially reaching $380 over the next 12 months, with several buy recommendations. Coinbase, which provides custody services for Bitcoin ETF issuers like BlackRock, is benefiting from this favorable environment. Other Bitcoin-exposed companies, like MicroStrategy, are also seeing record highs, with MicroStrategy’s stock reaching $351, reflecting growing investor interest in crypto-invested companies.

MicroStrategy now holds nearly $23 billion in Bitcoin after purchasing 27,200 BTC at the start of November for $2 billion, at an average price of $74,463 per unit. The Virginia-based company holds 279,420 BTC in total, having invested $11.9 billion, almost doubling its initial investment. Under the leadership of Michael Saylor, former CEO turned executive chairman, MicroStrategy shifted its strategy from traditional software to serving as a Bitcoin proxy, allowing traditional investors indirect access to Bitcoin without exchanges or the new U.S. ETFs. To finance these massive acquisitions, the company uses share issuance and debt, reflecting Saylor’s belief that Bitcoin is the best long-term wealth preservation tool. The company thus transforms cash into digital assets to maximize shareholder returns.

The German government missed out on approximately $1.6 billion by selling its 50,000 bitcoins four months ago, just before a significant rally. In July, Germany sold this stock for $2.88 billion, at an average price of $57,600 per bitcoin. Following November’s rapid increase, those bitcoins would now be worth $4.5 billion, a 56% rise. The U.S. has also missed potential gains by selling 195,091 bitcoins across 11 auctions over the past decade, for a total of $366.5 million. At current prices, that amount would be nearly $17 billion, representing an opportunity cost of $16.6 billion. However, Trump intends to retain seized government bitcoins to create a “national strategic bitcoin reserve.” Senator Cynthia Lummis has even proposed a bill for the U.S. government to purchase 1 million bitcoins, worth $88 billion today, to strengthen the dollar with a sustainable digital asset. If this strategy is adopted, it could offset some of the missed gains, although acquiring these bitcoins is now more expensive following recent price increases.

Standard Chartered predicts massive growth in the cryptocurrency market, potentially quadrupling to a $10 trillion market cap by the end of 2026. This outlook includes a strong rise in Bitcoin, which could reach $200,000, and Ethereum, which might exceed $10,000. This optimistic scenario is fueled by Trump’s election, with promises for crypto-friendly reforms, such as lifting restrictions for banks holding cryptos and possibly creating a strategic Bitcoin reserve. Standard Chartered also anticipates a decline in Bitcoin’s dominance within the cryptocurrency sector, from 60% to 40% by 2026, in favor of altcoins with real-world applications. The bank is particularly optimistic about Solana, which it believes could outperform Bitcoin and Ethereum due to its potential in real-world use cases. Finally, growing adoption in areas like gaming, decentralized infrastructure, and social networks should support the rise of altcoins, with Standard Chartered estimating that these applications will attract more investors, accelerating the growth of digital asset markets.

Please note that the author will be on vacation next week. The next communication will be sent on November 27th.

The presented information is as of November 12th, 2024, unless otherwise indicated and is provided for information purposes only. The information comes from sources that we believe are reliable, but not guaranteed. This statement does not provide financial, legal or tax advice. Rivemont Investments are not responsible for any errors or omissions in the information or for any loss or damage suffered.