FOMO is back. Since the election of Donald Trump last Tuesday, Bitcoin prices have soared, including a furious rally on Monday that saw the main cryptocurrency flirt with $90,000, a milestone that seemed unthinkable just two years ago in the context of the collapse of FTX. On Monday, Bitcoin became the eighth most valuable asset in the world, eclipsing silver.
With $100,000 now within reach, professional traders say a cryptocurrency-friendly presidential administration and the influx of institutional money could mean the rally is only just beginning.
“The market is realizing what a regime change is happening,” said Quinn Thompson, founder of crypto hedge fund Lekker Capital. Fortune. “The US government and regulators, the most powerful entities in the world, are now moving away from an anti-crypto stance to a supportive one.”
Radical political change
The crypto industry has endured a rough few years, with the collapse of major companies from FTX to Terraform Labs leading to a prolonged crypto winter and a wave of lawsuits and criminal charges from the US government. While the launch of Bitcoin ETFs in January sparked a year-long rally, the uncertain regulatory environment leading up to the presidential election kept institutional and retail money out of the markets.
Trump promised a different future for crypto during his campaign. While the former president criticized digital assets during his first term, he embraced the blockchain industry for a second time, courting donors and teasing projects like a strategic Bitcoin reserve, where the government would hold a cache of cryptocurrency. He also pledged to equip regulatory agencies with pro-crypto voices, which would be a major departure from figures like SEC Chairman Gary Gensler who sought to reign in the industry.
Even before the AP officially called Trump’s election early Wednesday morning, crypto markets surged on speculation he would win, even surpassing $70,000 the previous week. Since Wednesday, Bitcoin has been rising, even surpassing $80,000 on Sunday and reaching a high near $90,000 on Tuesday.
“What we’ve seen over the last week or so has been, from a policy standpoint, a return of people needing to pay attention to crypto,” said Zaheer Ebtikar, founder of crypto hedge fund Split Capital. “It has become not only a big winner of the year, but also an industry almost legitimized by the government.”
This policy adoption may just be beginning, especially as Trump begins to build a team of cabinet officials and advisers around him. The leader of its transition, Cantor Fitzgerald CEO Howard Lutnick, is a crypto booster and serves as the primary custodian of the leading stablecoin, Tether. Sources close to the transition also cited potential crypto-friendly picks at the SEC, including Robinhood chief legal officer Dan Gallager and former CFTC commissioner – and eponymous “CryptoDad” – Christopher Giancarlo.
Smart money
Speculation grew on Crypto Twitter about whether the arrival of institutional – or even sovereign – money spurred the rally. Thompson said institutional interest, including from university endowments, pensions and hedge funds, is a major factor, highlighting the “staggering” scale of ETF inflows. Ebtikar agrees, saying the price bidding has been mechanical rather than random.
The question of whether governments are also buying Bitcoin is more difficult to answer, although the change in US approach could create a rush. “The potential for a strategic Bitcoin reserve could motivate other nation-states around the world to evaluate the idea as well,” Thompson said.
The once-wayward influx of institutional money into crypto could also create a feedback loop, as capital allocators now face questions from their investment committees about how they approach the newly legitimized asset class . “Not only are prices going up, but they’re going up for a pretty monumental reason,” Ebtikar said.
According to Joshua Lim, co-founder of crypto trading platform Arbelos, Bitcoin is now in price discovery mode after surpassing its all-time high, meaning it has moved out of its normal price range and led to a revaluation among investors. And while institutional money may be driving the current recovery, retail is probably not far behind.
Lim said Fortune as extreme behavior begins to emerge, including highly leveraged retail trading leading to cascades of liquidations up and down, as well as flows into risky crypto sectors such as AI memecoins. And one metric for gauging demand – perpetual swap funding rates – are as high as 40-60%, compared to an average of 5-10%, reflecting much higher participation rates.
When Bitcoin will finally hit the mythical $100,000 barrier is anyone’s guess, but Thompson is optimistic it will happen soon. “I feel good about achieving this goal by the end of the year,” he said. Fortune. “Very possible by the end of the month, but we’ll see.”
