Bitcoin has recently seen a significant increase in inflows into its investment funds. Bitcoin approached the $100,000 mark, only a few hundred dollars away from it. However, the coin then saw a slight decline to $90,702 on Tuesday, before recovering again and is now trading at around $96,150. This move indicates sharp volatility in the value of the coin, highlighting the challenges it may face in breaking the $100,000 mark.
Profit-taking selling pressure
One of the main reasons for the price decline is the increase in profit-taking selling. With Bitcoin reaching unprecedented prices, some investors have started selling assets to realize their gains. Andrej Dragoš, head of research at Bitwise Asset Management, noted that long-term holders of Bitcoin have started selling large amounts of their coins during the recent bull run. This behavior has increased the supply in the market, leading to a decline in prices. Can Bitcoin Break $100,000?
Despite recent gains, some remain hesitant about Bitcoin’s ability to break $100,000. An analyst at a brokerage firm believes that this level is a major hurdle. According to Morrison, the $100,000 barrier seems to be a psychological barrier that is difficult to breach, and may limit Bitcoin’s moves towards higher levels. Some believe that this number may remain difficult to reach in the near future, especially with the slowdown in market growth.
Fears of money flowing at the expense of real value
Some experts warn that the rapid rise in the price of Bitcoin may give investors a false sense of security. In this context, the chief gold strategist stated that Bitcoin relies mainly on achieving returns, which means that many investors buy the currency for the purpose of speculating on price increases, rather than based on economic fundamentals or the real value of the currency.
Reasons for the return of the Bitcoin market
Bitcoin has recently seen a remarkable surge, pushing it closer to the $100,000 mark. This historic surge is the result of several intertwined factors, including large inflows into Bitcoin-linked exchange-traded funds (ETFs) and continued political support for the sector. A group of 12 US-based exchange-traded funds that invest in Bitcoin are close to setting new monthly inflows records.
Bitcoin ETF Support
One of the main reasons behind this surge is the remarkable increase in inflows into Bitcoin-invested ETFs. According to Bloomberg data, Bitcoin-linked ETFs such as BlackRock and Fidelity Investments attracted inflows worth $6.2 billion in November. This figure surpasses the previous record of $6 billion achieved in February. This significant growth in inflows comes amid a state of optimism among investors, especially with the start of a new year and the launch of new financial products in the cryptocurrency sector. Political Support and the Impact of Trump’s Statements
One of the factors that contributed to the recent rise in Bitcoin was political support, especially from President-elect Donald Trump. Trump promised to reverse the Biden administration’s policy of tightening regulation of cryptocurrencies, which boosted confidence in the sector. In addition, Trump supported the idea of creating a US strategic reserve for cryptocurrencies, which will contribute to strengthening the acceptance of Bitcoin as a major investment asset in the markets.
Future expectations for Bitcoin funds
In light of these circumstances, experts indicate that the flow of funds into Bitcoin ETFs may continue to rise. According to Josh Gilbert, market analyst at eToro, these flows are expected to continue significantly, especially with the incoming administration. With more companies and pension funds expected to shift towards investing in Bitcoin, these assets are expected to become more accessible and easy for investors.
The impact of political changes on the cryptocurrency market
The US Securities and Exchange Commission (SEC) under outgoing Chairman Gary Gensler approved the launch of Bitcoin ETFs in January. This decision came after a court ruling in 2023, which helped expedite the approval of these funds. Later, the commission gave the green light to launch investment funds focused on Ethereum, the second-largest cryptocurrency by market capitalization.
Political Changes and Their Impact on the Future of Cryptocurrency Funds
With Gensler set to leave office, many are expecting President-elect Donald Trump to appoint a new SEC chairman who will likely be more supportive of crypto assets. This change in leadership could pave the way for the launch of new investment funds targeting various crypto tokens, further contributing to the growth of the sector.
Trump’s Stance on Cryptocurrencies
It is worth noting that Trump, who was previously skeptical about cryptocurrencies, has significantly modified his position. This change came after the cryptocurrency sector received significant financial support during his election campaign. The growing support for this sector indicates a political shift towards more institutional acceptance of cryptocurrencies, which will lead to significant investment in this space.
Bitcoin and Ethereum Funds as a Sign of Growth
Bitcoin ETFs are a clear example of the rapid growth that the cryptocurrency industry has witnessed. With the upcoming political and regulatory changes, institutional support for this sector is expected to increase. These funds represent a new phase in the development of cryptocurrencies, as investors will continue to benefit from the high volatility of these digital assets. This type of investment may lead to sharp volatility in the future. While the market may see a temporary price increase, a price correction may occur when confidence in returns-based investments is affected.
