Bitcoin Briefly Eclipses $99,000 – Why Investors Just Can’t Get Enough

Bitcoin (BTCUSD) briefly surged past $99,000 on Thursday, setting another price record as investors big and small can’t seem to get enough of the cryptocurrency.

The largest cryptocurrency by market cap has more than doubled in value this year, gaining over 130% year-to-date, and is now within striking distance of the $100,000 mark, a level that was unthinkable a year ago when it traded near $37,000.

Donald Trump’s victory in the US presidential election earlier this month and the promise of a more crypto-friendly administration have driven bitcoin prices 46% higher in just over two weeks.

Investors also cheered the announcement of the departure of US Securities and Exchange Commission Chairman Gary Gensler on Thursday. Gensler faced criticism from the crypto industry for his enforcement approach.

Bitcoin-hungry investors fuel price rally

Bitcoin is gaining interest from investors, both retail and institutional.

Flows into spot bitcoin exchange-traded funds (ETFs) have also hit records over the past few weeks. These products hold bitcoin and buy the cryptocurrency as more investors pour money into them, which in turn drives bitcoin prices higher.

And these products aren’t just becoming popular with retail investors. According to data analyzed by Coinbase, more institutional investors — such as hedge funds and investment advisers — bought into spot bitcoin ETFs in the third quarter than in the previous one.

Meanwhile, bitcoin-related stocks have also received massive action on Wall Street.

According to Bloomberg Senior ETF Analyst Eric Balchunas, what he refers to as the “Bitcoin Industrial Complex,” a collection of publicly traded companies and ETFs with direct or indirect exposure to the bitcoin price, has a record of more than $50 billion in trading volume. on Wednesday. In particular, MicroStrategy (MSTR), which revolved around a strategy to acquire bitcoin in 2020, has recently had stock trading volumes that rival Tesla (TSLA) and Nvidia (NVDA).

MicroStrategy has more than 331,2000 bitcoin worth more than $32 billion at current prices on its books, and the company’s stock is up more than 500% this year. That has prompted many more publicly traded companies to take a leaf out of MicroStrategy’s bitcoin playbook.

While bitcoin miner Marathon Holdings ( MARA ) and healthcare company Semler Scientific ( SMLR ) have done so in the past, Cosmos Health ( COSM ), LQR House ( LQR ), and Acurx Pharmaceuticals ( ACXP ) have all issued bitcoin purchase announcements this week.

$100,000 in sight, but correction may follow

The $100,000 price milestone may not be too far away, but many experts say bitcoin may not sustain a break at this level for too long.

Despite the strong interest from institutions, Galaxy Digital Chief Executive Officer (CEO) Mike Novogratz warned that a correction is coming in an interview with CNBC Thursday morning. “The crypto community is lifted to the gills, and so there will be a correction,” Novogratz said.

He expects bitcoin’s price to fall to $80,000 levels, which would represent a 20% drop from the $100,000 mark.

Bitcoin is shaking off its correlation to gold

Bitcoin’s original premise as an investment included the fact that it was decoupled from the stock markets and instead considered “digital gold.” Gold is often compared to a safe haven during times of turbulence in the stock markets.

Both bitcoin and gold have set multiple price records in the past few months; however, gold has recently faltered and some experts are even suggesting a rotation from gold to bitcoin.

According to data from The Block, bitcoin’s 30-day Pearson correlation with gold has gone from 0.82 to -0.66 since November 5, when the US election took place.

This effectively means that bitcoin and gold have gone from being highly correlated to being inversely correlated in a matter of weeks. That said, bitcoin remains highly correlated with the stock market, maintaining Pearson correlation scores of 0.7 and 0.76 with the S&P 500 and Nasdaq as of Wednesday.