As a seasoned researcher with over two decades in the financial markets under my belt, I have seen bull and bear cycles come and go like the changing of seasons. The recent surge in Bitcoin’s price to an all-time high following Donald Trump’s re-election victory has caught my attention, as it did for many others.
Bitcoin (BTC) soared by 10.5%, reaching an unprecedented peak of $75,350 between November 5 and November 6, as a result of speculation following the hypothetical victory of former U.S. President Donald Trump in the 2024 election.
Regardless of the current ups and downs in prices, the market shows a solid base that encourages further expansion. The rise in Bitcoin derivative products signifies an enhancement in investor optimism and reduced risky borrowing, crucial factors for surpassing the $75,000 mark.
The cost difference between Bitcoin futures and the spot market increased to 12%, moving beyond the neutral range of 5% to 10%. Yet, this rise in premium doesn’t seem to quell the underlying skepticism within the market, especially given Bitcoin’s recent high and the predicted positive impact a Trump presidency might have on institutional adoption.
Insights from Bitcoin options trading and growing institutional investment suggest potential further price increases. Yet, it’s essential to grasp why some traders are still wary, even with positive market trends and anticipation of a friendlier regulatory landscape.
Bitcoin bulls were hurt in the past, and the US monetary policy could shift
Investors’ caution can be partly attributed to the six consecutive months where prices failed to hold above $72,000, leading to trader skepticism. Additionally, the upcoming US Federal Open Market Committee (FOMC) decision on interest rates on Nov. 7, followed by remarks from Federal Reserve Chair Jerome Powell, adds to the uncertainty.
In light of widespread anticipation for a 0.25% interest rate reduction, Bitcoin traders are concerned that conventional stock markets could see greater gains. This apprehension arises as President Trump suggests a protectionist policy, including a potential 20% tariff on all imports and a punitive tax for U.S. companies outsourcing jobs abroad, as reported by Time magazine.
If the Trump administration effectively reduces the U.S. government’s debt by implementing budget cuts, it could potentially decrease the appeal of assets like gold and Bitcoin that are often used as hedges against economic instability. Consequently, the election outcome might lead to varying effects on the future demand for Bitcoin, with some positive and negative impacts to consider in the long term.
To determine if major Bitcoin investors and market manipulators think the current surge might not last, it’s beneficial to scrutinize the structure of BTC options. In stable market scenarios, the 25% delta skew should ideally remain close to parity between buying (call) and selling (put) options, usually ranging from -7% to +7%.
On November 6th, the Bitcoin (BTC) options skew reverted back to a balanced 6%, mirroring the measured optimism in the Bitcoin futures market and indicating no extreme levels of borrowing. This situation could foster continued positive price movement.
In simpler terms, the trends suggesting from Bitcoin derivative trades seem optimistic, which means the market could simply require a short period, possibly a couple of days or weeks, as traders adapt to the latest price points.
From my perspective as an analyst, the escalation of the U.S. 5-year yield to 4.28% carries considerable weight, raising questions about the feasibility of maintaining robust U.S. economic growth without a substantial upsurge in the M2 money supply. This implies a notable adjustment in monetary policy is required.
This information indicates doubts about the Federal Reserve’s capacity to manage a gentle economic transition, implying that preventing a recession might necessitate extensive monetary stimulus. This scenario, in turn, could significantly boost the value of Bitcoin.
This piece is meant to provide broad, non-binding insights rather than serving as legal or financial counsel. The perspectives, ideas, and viewpoints conveyed within this article belong solely to the writer and may not align with or be endorsed by CryptoMoon.
Read More
- DYM PREDICTION. DYM cryptocurrency
- CYBER PREDICTION. CYBER cryptocurrency
- ZK PREDICTION. ZK cryptocurrency
- JASMY PREDICTION. JASMY cryptocurrency
- POPCAT PREDICTION. POPCAT cryptocurrency
- Top gainers and losers
- SKEY PREDICTION. SKEY cryptocurrency
- TURBO PREDICTION. TURBO cryptocurrency
- RUNE PREDICTION. RUNE cryptocurrency
- GEOD PREDICTION. GEOD cryptocurrency
2024-11-06 23:42