Bitcoin $100,000! (Patreon)

Crypto prices spiked up bigly after the Trump win. Bitcoin is making new all time highs, creeping closer to 90k. The numbers are off the charts. In terms of price, Bitcoin is up 30% since elections which is essentially just last week. Other tokens, including altcoins have done even better. ETH is up almost 40%. DOGE, liked by Elon Musk, is up over 100%.

Crypto equities are also up significantly. Names like MSTR, COIN, and all the crypto miners are all up around 50% since elections. ETFs have also seen the biggest multi billion dollar inflows with IBIT 1 day trading volumes reaching over USD4bn dollars, more than blue chip stocks like Tencent, Netflix, etc

The price action confirms the belief that a Trump win is a major game changer for crypto. The combination of Trump’s promised legislative and regulatory changes + a Republican sweep in senate and house + the fact that Trump is not inaugurated until Jan 20, makes the following few month a potential explosive period in bullish crypto action

Fundamentals

In terms of breaking down the fundamental impact that a Trump presidency would have on crypto, there’s a couple initiatives that Trump mentioned that would be impactful:

• Establishing a Strategic Bitcoin Reserve: Trump proposed creating a national Bitcoin reserve, instructing law enforcement to retain seized Bitcoin instead of auctioning it off. This reserve would be intended to support the U.S. economy and help reduce national debt.

• Creating a Bitcoin and Crypto Advisory Council: Within his first 100 days, Trump intends to establish an advisory council composed of industry experts tasked with designing transparent regulatory frameworks beneficial for the crypto industry.

• Removing SEC Chair Gary Gensler: He promised to fire Gary Gensler, the current SEC Chair, criticizing his regulatory approach toward cryptocurrencies. Trump indicated that he would appoint someone more favorable to the crypto industry.

If any one of these are enacted, it would be a huge game changer relative to the unfriendly regulations that crypto has faced in the past few years.  As outlandish as many of these would have sounded just a few month ago, Trump is actually well positioned to enact many of these initiatives. The reason is because

1.       Republicans are in control of both the senate and the house, making it easier to pass legislations

2.       The crypto industry have managed to help elect many pro-crypto politicians to many important seats

3.       Elon Musk is pro-crypto and Trump respects his opinions

There should be many fundamentally important catalysts to monitor as Trump settles in to his presidency next year.

A bill is already drafted to create a Strategic Bitcoin Reserve

Not to mention that the crypto industry flexed its muscle this election and backed many winning pro-candidates

In terms of liquidity, we also saw significant changes post a Trump win.

Most dramatically, BTC ETFs led by BlackRock’s IBIT posted a daily net inflow of almost $1.4bn right after the elections. It also had a single day trading volume of USD4.1bn. To put that in perspective, that’s more than 4x the average daily trading volume of Tencent, which is the most liquid stock in HK.

Institutions have also poured money into crypto stocks. For example, Coinbase stock price is up more than 50% since elections.

Retail is also starting to come back. Open interests have reached all time highs for tokens like Bitcoin and ETH, while funding rates are starting to tick back up again.

USD 1.4bn inflow into BTC ETFs one day after elections

Funding rate starting to rise. BTC funding rate as high as 56%

Risks

The biggest risk with any crypto rally is that people get way too excited and all fomo into the asset with significant leverage, causing the inevitable crash. It’s important to understand this asset is extremely volatile and will retrace 20-30% easily even in a bull market.

Fundamentally, the risk is that Trump’s tariff, deregulation, immigration policies would all cause inflation to spike with corresponding higher yields. But this risk won’t really be front and center until next year upon Trump’s inauguration.

For now, I remind positive given Trump’s crypto promises and the fact that Republican’s sweep will ensure that the following 4 years will see almost a 180 turn versus the previous 4 years in terms of government regulations on cryptocurrency.

Technical

On swing trading, BTC has reached my target of 80000 where I sold some into strength, and holding on to the rest to sell into weakness when momentum dissipates.

Longer term: looking at this cup and handle set up that started in Sept 2021, a 100% projection (i.e. it goes up as much as the depth of the cup) would place the target at $105,000 - pretty close to the big psychological level of 100k.

I won't be so greedy, if everyone is aiming for 100k, I'll start trimming from 97k onward. This is not to say I think Bitcoin is done at 100k, but perhaps the path of the price will be less trendy (i.e. go through another phase of consolidation before moving again).

At the moment I am not really trading altcoins. Besides DOGE, due to its connection to Elon Musk, most altcoins are showing relative weakness to Bitcoin. Perhaps we are still early in this new bull market and we'll see a rotation later, or perhaps the new narrative is traditional finance money will go into crypto. But that money will only go into BTC and some ETH, and not PEPE and other shitcoins.

Disclaimer: The content of this post is solely for entertainment and not investment advice. Any views expressed in the below are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions