22 November 2024

$99,000! That’s sweet.

$100,000 – that’s a revolution! We are on the cusp on history with Bitcoin and we can be proud we were part of it all! By the time you read this, $100,000 may have been breached. If six figures sounds great, wonder how it will feel when Bitcoin hits seven figures? (A million is probably five years away?)

For now, let us analyse what this means for Bitcoin and its path ahead.

Top-3 stories of the week:

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The newsletter is put together by Giottus Crypto Platform. You can read all the previous issues of Cryptogram here.

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WEEKLY MACROS

• Total crypto market cap - $3.3 trillion - UP  13.4%

• Bitcoin price - $99,081 - UP 12.7%

• The dollar index (DXY) - 107.14 - UP 0.3%

• Bitcoin Dominance - 60.32% -  DOWN 1%

• Crypto Fear and Greed Index - 94 - Market is in Extreme Greed

THE HOT TAKE

Bitcoin at $100,000: What lies ahead? 🚀

Today is a big day; we just saw BTC spike up to $99,000. This might even be one of the last times BTC closes at an all-time high below $100,000. Polymarket odds are currently suggesting BTC closing out the month of November above the key $100,000 level.

Today’s move upward came after trading closed in US hours on Thursday, a session that yielded large ETF net inflows. Totaling $1.05 billion, this marks four straight days of significantly positive flows, after a couple of days of profit-taking last week that led to net outflows. 

The looming possibility for a Bitcoin strategic reserve in the US remains the more exciting narrative for markets to get behind. Today, we present the key drivers that could propel BTC in longer run and why the rally has just started for the biggest asset in cryptoverse.

Government regulations will lead to wider adoption

Institutional and government play has been paramount in establishing legitimacy and wider adoption for any new asset class.

Classic example is the green bonds. Countries like France and Germany issued green bonds to fund renewable energy and infrastructure, showing investors that these assets are credible and impactful. EU established standards for what qualifies as a green bond, giving investors confidence their money supports legitimate environmental projects. Backing from entities like the World Bank inspired private investors to follow suit, creating a larger, more stable market for green bonds worldwide.

Similarly, countries like El Salvador made Bitcoin legal tender, encouraging businesses and individuals to use it for payments, which boosted its credibility globally. Sovereigns can no longer afford to dismiss BTC.

Governments worldwide are currently holding 2.5% of Bitcoin's total supply. However, if US manage to establish a strategic reserve of Bitcoin, this will fundamentally be the next catalyst for BTC’s journey towards $200,000.

MicroStrategy advocating other biggies to invest in BTC

MicroStrategy’s Bitcoin play will become a classic example in the future.

In the early days, the company’s CEO Michael Saylor didn’t have good things to say about Bitcoin. Ironically, his first interaction with $BTC was actually terrible, which is a standard reaction for anyone when they first hear about the asset. Skepticism is normal for hours, days, or even months. It takes time to understand $BTC. Back then, Bitcoin was trading at roughly $800.

Fast forward to COVID-19, a period that changed everything for Michael Saylor as monetary creation skyrocketed. Put simply, the US grew the dollar’s monetary mass by 40% in two years, diluting each and every dollar holder’s buying power. Michael Saylor didn’t like it much and chose another path.

He decided to go all in, emptying $MSTR's balance sheet to buy BTC - 21,454 of them for $250 million or $11,652 per BTC in November 2020. Today, $MSTR owns 331,200 $BTC amassing 1.58% of the entire supply with an average price of ~$49,874, for an actual market value around $30 billon.

In a November 19 Twitter Space discussion hosted by Bitcoin ETF issuer VanEck, the Bitcoin maximalist announced that he has agreed to deliver a concise, three-minute presentation to Microsoft’s leadership.

Macroeconomic trends to favour BTC

The macroeconomic landscape has increasingly become a key driver for Bitcoin's adoption and price performance. Rising global inflation, driven by excessive government spending and monetary easing, has reinforced Bitcoin’s role as a hedge against fiat currency debasement. Prominent voices, such as Elon Musk, have pointed out that all government spending ultimately results in taxation, either directly through levies or indirectly via inflation caused by an expanded money supply.

In such an environment, Bitcoin’s fixed supply and decentralized nature make it an attractive alternative to traditional stores of value like fiat currencies or even gold. As central banks worldwide continue to struggle with inflation control, Bitcoin’s narrative as "digital gold" strengthens, providing a safe haven for investors seeking to preserve wealth.

Why does BTC have room to grow this cycle? (next year or so)

Limited retail participation yet

One of the most direct signs of retail interest is the number of new Bitcoin addresses created. Historically, sharp increases in new addresses have often marked the beginning of a bull run as new retail investors flood into the market.

Last year, we saw around 791,000 new addresses created in a single day—a sign of considerable retail interest. In comparison, we now hover significantly lower, although we have recently seen a modest uptick in new addresses.

Google searches remain low

Google Trends also reflects this tempered interest. Although searches for “Bitcoin” have been increasing in the past month, they remain far below previous peaks in 2021 and 2017. It seems that retail investors are showing a renewed curiosity but not yet the fervent excitement typical of FOMO-driven markets.

Prices rally despite profit taking

Over the past week, the market has seen a wave of profit-taking, with daily realized profits averaging about $3 billion — the highest in over a month, according to CryptoQuant. Normally, such significant profit-taking leads to price dips. However, Bitcoin has defied expectations, continuing to hit new all-time highs despite holders cashing out larger profits.

Key Takeaway

Bitcoin's rally to new all-time highs has captured attention, but the typical signs of widespread retail FOMO remain absent. This subdued retail participation suggests that we may still be in the early stages of this bull market. Key indicators, including the confidence of long-term holders, steady accumulation by whales, and moderate leverage levels, point to a healthy and sustainable upward trend.

As this bull cycle progresses, the market structure hints at the potential for a significant surge fuelled by retail interest. If retail investors join in, it could drive Bitcoin to uncharted heights.

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If you have any questions or feedback for us, write to us at [email protected]. You can check out the previous issues here.

Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.