Bitcoin reaches new ATH of $75K as Trump takes early lead

Bitcoin has surged to a fresh all-time high (ATH) of $75,000 on November 6, surpassing its previous peak of $73,800 from March, in a rally closely tied to early results from the U.S. presidential election. With former president Donald Trump leading over Vice President Kamala Harris, cryptocurrency markets have reacted strongly, as investors perceive a Trump victory as potentially favorable for Bitcoin.

Bitcoin surged past $75,000: A new all-time high

Bitcoin’s latest ATH isn’t an isolated event; it’s the culmination of several factors that have made this rally unique compared to previous ones. Here’s a breakdown of the main drivers:

1. Institutional investment: A major backing force

Bitcoin’s price has seen substantial support from institutional investors over recent years, and this rally is no different. Major firms like Metaplanet, a Japanese investment giant, have made substantial investments in Bitcoin, adding to its credibility as a long-term asset. Metaplanet’s Bitcoin holdings now total over 1,018 BTC, valued at approximately $68.8 million. The firm’s decision to expand its position in Bitcoin signals institutional confidence, with big players betting on Bitcoin as a secure, appreciating asset in the face of global economic uncertainties.

2. Political uncertainty and the “Trump trade” narrative

As early election results show Trump leading with 198 electoral votes to Kamala Harris’s 112, the market has reacted with what analysts call the “Trump trade” effect. According to Bitfinex analysts, Trump’s lead is perceived as bullish for Bitcoin due to the expectation of reduced regulatory oversight on the crypto industry. This perception has fueled a narrative that Trump’s victory could open the door for more favorable policies toward digital assets, encouraging investors to buy into Bitcoin in anticipation.

3. “Extreme Greed”

Investor sentiment has shifted towards “Extreme Greed,” as shown in the Fear and Greed Index, a popular metric used to gauge crypto market sentiment. This move suggests that both retail and institutional investors see the current market environment as a lucrative entry point, despite Bitcoin’s already elevated price. Additionally, Google Trends data shows a spike in Bitcoin-related searches, pointing to rising interest among retail investors looking to capitalize on the rally.

Bitcoin has surged to a fresh all-time high (ATH) of $75,000 on November 6 (Image credit) Bitcoin’s election-driven surge

The timing of Bitcoin’s rally has raised questions about whether Trump’s election performance is a genuine catalyst for Bitcoin’s rise. Data from prediction markets like Polymarket show Trump’s odds of winning climbing above 60%, while Bitcoin’s price has mirrored this trajectory, crossing the $70,000 threshold as his odds increased. This apparent correlation has led to widespread speculation that Bitcoin’s recent movements are directly tied to Trump’s election prospects.

Market analysts have pointed out that political uncertainty often leads to increased interest in decentralized assets like Bitcoin, which are seen as resistant to government influence. If Trump’s odds continue to rise, Bitcoin could reach as high as $86,000 in the near term. This level would serve as a significant psychological barrier, where breaking past it could lead to even greater upward momentum.

Where is Bitcoin headed next?

While Bitcoin’s current price is impressive, many analysts and traders believe there’s still room for further gains. Here are some of the technical metrics suggesting Bitcoin may have more to offer:

Is Bitcoin overvalued?

The Market Value to Realized Value (MVRV) ratio is a popular metric used to evaluate Bitcoin’s fair market value. With Bitcoin’s MVRV ratio currently at 2, the data suggests that BTC remains undervalued compared to previous peaks when the MVRV hit levels of 4 or higher. In the past, such undervaluation has preceded explosive price rallies, providing an optimistic outlook for Bitcoin’s future performance.

Options market activity

The options market provides valuable insight into where traders expect Bitcoin to head in the short term. According to recent data from CME, large players have placed substantial bets on Bitcoin reaching $80,000 by the end of November. However, protective bets are also in place, with a significant amount of downside protection purchased at the $50,000 level, suggesting some caution amid the election-driven volatility. Noted options trader Peter Stewart remarked, “There’s been substantial notional interest in $80,000 and $85,000 targets, but traders are also hedging their bets with downside protection to guard against potential shifts in the political landscape.”

The timing of Bitcoin’s rally has raised questions about whether Trump’s election performance is a genuine catalyst for Bitcoin’s rise (Image credit) Bitcoin’s historical highs

To better understand the significance of Bitcoin’s current price levels, it’s helpful to look at its historical peaks. Bitcoin’s previous ATHs have often come during periods of heightened interest or market optimism, often driven by events that transcend the crypto space. Here’s a quick rundown of Bitcoin’s major peaks:

• November 2021: Bitcoin hit a then-record high of $69,000, driven by institutional interest and the broader 2021 bull market.
• April 2021: Bitcoin’s price reached $64,895, fueled by rising institutional demand and macroeconomic concerns.
• December 2017: The crypto hit $19,188, with retail investors driving a frenzied buying spree during Bitcoin’s first major bull run.
• November 2013: Bitcoin surpassed $1,000 for the first time, marking its entry into mainstream financial discussions.

Bitcoin’s latest ATH, crossing the $75,000 mark, stands out as it comes amid global political uncertainty, particularly with the U.S. election spotlight.

The impact on altcoins

Historically, when Bitcoin reaches new highs, it often creates a positive impact on other cryptocurrencies as well. The correlation between Bitcoin and altcoins tends to rise during bullish trends, as investors seek to capitalize on market momentum.

Altcoin surge potential

With Bitcoin’s price reaching $75,000, altcoins are likely to see increased interest. Investors may view these assets as potential alternatives with high growth potential, given the often lower entry prices compared to Bitcoin. Ethereum, for instance, has shown similar upward movement, as have other top altcoins like Solana and Cardano, both of which have seen positive price movements in Bitcoin’s wake.

Bitcoin’s role as a reserve asset

As interest grows in Bitcoin, there’s also a trend of institutional investors viewing it as a potential reserve asset. A report by the Bitcoin Policy Institute posits that Bitcoin’s low correlation with traditional assets makes it an effective hedge against inflation, economic instability, and geopolitical risks. Matthew Ferranti, an economist, points out that Bitcoin’s unique position as a decentralized asset allows it to function as an alternative reserve for countries aiming to reduce dependency on the U.S. dollar.

To better understand the significance of Bitcoin’s current price levels, it’s helpful to look at its historical peaks (Image credit) Volatility and caution: What to expect in the coming days

Despite the optimism surrounding Bitcoin’s latest rally, market experts caution that the cryptocurrency’s price is likely to remain volatile in the short term. The political landscape could shift, especially if Harris gains momentum in the remaining swing states, potentially affecting market sentiment. Additionally, significant protective measures have been observed in the options market, indicating that while some investors are hopeful, others remain wary of potential pullbacks.

Protecting against downside risks

With political uncertainties still in play, some traders have placed substantial downside protection for Bitcoin. According to CME data, large amounts of put options have been purchased at the $50,000 level, as traders hedge their positions against sudden drops that could occur if Harris closes the gap in swing states.

Featured image credit: Kerem Gülen/Ideogram