06.12.202409:50 Forex Analysis & Reviews: Bitcoin Proves Its Worth

With the retreat of "Trump trading" and Federal Reserve officials affirming that monetary policy remains restrictive, why is Bitcoin rising? The 45% rally in BTC/USD since Donald Trump's victory in the U.S. presidential election provides a clear answer: a president promising to create an ideal environment for crypto assets is the best incentive to buy the token.

"We told you so!" This was the reaction of Bitcoin enthusiasts as the cryptocurrency surged past the psychologically significant $100,000 mark, driven by the latest appointments in the team of the newly elected U.S. president. Crypto-friendly individuals, such as the new head of the SEC and the "White House Czar for AI and Crypto Industry," have given BTC/USD bulls a reason to overlook negatives like the bankrupt Mt. Gox exchange moving $2.4 billion worth of Bitcoin to an anonymous wallet. Just in October, fears of increased token supply had pushed prices downward.

However, it's not just supply that drives prices—it's also demand. MicroStrategy's acquisition of 402,000 Bitcoin, totaling $41 billion, and capital inflows into specialized ETFs totaling $32 billion this year (including $8 billion since Trump's election victory) strengthen the case for BTC/USD bulls.

S&P 500 and Bitcoin Performance Trends

The almost-official 47th U.S. president congratulated Bitcoin supporters on reaching this historic milestone. However, the rise of crypto isn't solely attributable to the Republican leader. Bitcoin also reacts to improved global risk appetite, as evidenced by the S&P 500's 28% rally. Lowering the federal funds rate by 75 basis points since the start of the Federal Reserve's monetary easing cycle, along with expectations of further cuts in 2024 and three or four more in 2025, has bolstered BTC/USD prices.

That said, no trend is without corrections. Historical bull markets have seen 20-40% pullbacks, and the futures market indicates strong demand for derivatives hedging Bitcoin risks near $95,000 and in the $70,000-$75,000 range. BTC/USD might be in for a rollercoaster ride!

Such wild fluctuations have drawn significant public attention. In November, crypto trading volumes on centralized exchanges and derivatives platforms exceeded $10 trillion for the first time. Centralized exchange volumes jumped by 127% to $3.43 trillion, the second-highest since May 2021.

On the daily chart, BTC/USD is forming an "Adam and Eve" pattern. Following a wide-range bar, consolidation within its boundaries is likely before the market determines its next direction. A breakout and sustained move above the pivot level at $99,650 could justify further buying, while a drop below the fair value of $95,900 may signal selling opportunities.