Bitcoin has recently hit an all-time high, soaring to an impressive $97,852 on Binance. Over the past 24 hours, the cryptocurrency has experienced a 5% increase, and in a little over two weeks, it has surged by a remarkable 43% since November 5. As Bitcoin continues its upward trajectory, several critical factors are fueling this extraordinary rally.
#1 US Strategic Bitcoin Reserve Trade
The recent victory of Donald Trump in the US presidential election has significantly altered market sentiment. What began as the “Trump trade” has transformed into the “US Bitcoin Reserve Trade.” This shift is driven by speculation that President-elect Trump might establish a Strategic Bitcoin Reserve (SBR), following his pledge at the Bitcoin 2024 conference in Nashville.
Industry insiders, including David Bailey, CEO of BTC Inc and a Trump campaign advisor, as well as Dennis Porter, CEO of Satoshi Act Fund, have suggested that the SBR could become a reality. Both advocates are pushing for its establishment within the first 100 days of Trump’s presidency through an executive order, warning that the US could fall behind in the global race to accumulate Bitcoin.
Insights from Industry Experts
On November 9, Bailey revealed, “There is at least one nation-state that has been actively acquiring Bitcoin and is now a top 5 holder. Hopefully, we hear from them soon.” He reinforced his claim with a meme, indicating his information is based on solid knowledge rather than mere speculation. Mike Novogratz, CEO of Galaxy Digital, confirmed in a recent interview with Bloomberg TV that “countries are already buying BTC in huge volumes.”
The “US Bitcoin Reserve Trade” is anticipated to persist until Trump’s inauguration on January 20. Whether Trump will follow through on his promises remains uncertain, but there is speculation that he might move over 208,000 BTC confiscated by law enforcement into the reserve or even adopt Senator Cynthia Lummis’ Bitcoin Act proposal to acquire 1 million BTC over five years.
#2 Potential Appointment Of A ‘Crypto Czar’
On Wednesday, a leak suggested discussions within President-elect Trump’s team about creating a new White House position dedicated exclusively to Bitcoin and crypto policy. Sources familiar with the transition efforts indicate that candidates are currently being vetted for this pioneering role.
If this position is established, it would mark the first Bitcoin and crypto-specific role within the White House, highlighting the significant influence this emerging industry could wield in the incoming administration. While it is unclear whether the position will be a senior White House staff role or a “crypto czar” overseeing policy and regulation across the federal government, crypto industry advocates are lobbying for a direct line to Trump, which could be transformative for the entire industry.
#3 Launch Of Bitcoin ETF Options
The introduction of Bitcoin ETF options has profoundly impacted the market. BlackRock’s iShares BTC Trust (IBIT) ETF options, launched on November 19, 2024, witnessed an unprecedented $1.9 billion in notional exposure on their first day of trading. Bloomberg ETF expert James Seyffart stated, “Final tally of IBIT’s 1st day of options is just shy of $1.9 billion in notional exposure traded via 354k contracts. 289k were Calls & 65k were Puts. That’s a ratio of 4.4:1. These options were almost certainly part of the move to the new Bitcoin all-time highs today.”
Jeff Park, Head of Alpha Strategies at Bitwise Invest, recently emphasized the groundbreaking nature of Bitcoin ETF options:
“With the approval by the SEC to list and trade Bitcoin ETF options, we are on the verge of witnessing the most extraordinary upside ‘vol’ of ‘vol’ in financial history. For the first time, Bitcoin’s notional value will be ‘fractionally banked’ with ETF options. This marks the most monumental advancement possible for the crypto market.”
Park elaborated that Bitcoin ETF options provide a regulated market where the Options Clearing Corporation (OCC) protects clearing members from counterparty risks, allowing Bitcoin’s synthetic notional exposure to grow exponentially. He highlighted that this development could lead to an explosive recursive effect on Bitcoin’s price due to unique volatility characteristics and the “volatility smile.”
#4 Surge In Spot Market And Bitcoin ETFs
The latest rally has also been driven by significant activity in the spot market. Heavy spot bids have propelled the price higher, with recent BTC ETF inflows being a crucial factor. Inflows amounted to $773.4 million, with BlackRock contributing $626.5 million, Fidelity $133.9 million, Bitwise $9.2 million, and ARK Invest $3.8 million. Over the past three days, US spot Bitcoin ETFs have purchased a staggering $1.856 billion worth of Bitcoin.
The total net asset value of US Bitcoin spot ETFs has now exceeded $100 billion. Twelve Bitcoin ETFs, including those from BlackRock and Fidelity, were issued in January and have reached this milestone in just ten months.
At the time of writing, BTC is trading at $96,920.
