Bitcoin surges past $106,000! Experts warn of risk of epic correction
summary：
Bitcoin made a significant breakthrough this morning, surpassing $106,000, setting a new a... Bitcoin surges past $106,000! Experts warn of risk of epic correction
Bitcoin made a significant breakthrough this morning, surpassing $106,000, setting a new all-time high, continuing the strong upward trend that has followed U.S. President-elect Donald Trump's endorsement of cryptocurrencies. Since the U.S. election, Bitcoin’s price has surged over 55%, marking seven consecutive weeks of gains, the longest such streak since 2021.
Market sentiment has been driven by several factors. Trump's support for cryptocurrencies during his campaign and after his election has fueled excitement, particularly with proposals such as a "national Bitcoin reserve." This policy direction not only sparked enthusiasm but also raised expectations for a more lenient regulatory environment for cryptocurrencies in the U.S. Additionally, news that the Federal Reserve might announce interest rate cuts this week further boosted market sentiment. Early today, Bitcoin reached a peak of $106,352, breaking the previous high set on December 5, before retreating slightly to $105,038, reflecting a 3% increase over the past 24 hours.
Meanwhile, Ethereum, the second-largest cryptocurrency by market capitalization, has also shown strong upward momentum. The price of Ethereum rose to $4,012.57 earlier today, before settling at $3,983 at the time of writing, with a 2.5% gain over the past 24 hours. This growth reinforces Ethereum’s critical role in the decentralized finance (DeFi) space and smart contracts, indicating continued market recognition of its technological potential.
Trump’s Policy Drives Cryptocurrency Market Surge
Trump’s supportive stance on cryptocurrencies is widely seen as a key driver of Bitcoin and other cryptocurrencies' price increases. In contrast to the stricter regulatory approach under the Biden administration, Trump’s policies have been more relaxed and supportive of innovation. His proposal for a “national Bitcoin strategic reserve” signifies a potential integration of cryptocurrencies into the U.S. financial system, reflecting his aim to position the U.S. as a global leader in the cryptocurrency industry.
This policy has sparked positive market reactions. Investors have turned their attention to cryptocurrencies like Bitcoin, hoping to capitalize on the potential benefits of more favorable regulations. Aya Kantorovich, co-founder of investment platform August, noted, “Investors are betting on a friendlier regulatory environment under Trump’s administration.” She also highlighted that since the U.S. election in November, Bitcoin-focused exchange-traded funds (ETFs) have attracted over $122 billion in capital, reflecting strong demand for cryptocurrency assets.
Market Sentiment Remains Elevated, but Risks Persist
Bitcoin’s strong upward trend is evident not only in price but also in investor sentiment indicators. The "Fear and Greed Index" has surged to 83, indicating extreme greed among investors. While this reflects confidence in Bitcoin’s future performance, elevated market sentiment also raises concerns about potential short-term corrections.
Tony Sycamore, a market analyst at IG Australia, warns that despite Bitcoin’s record highs, short-term price corrections could occur. He points out that when market gains begin to slow, the potential for profit-taking could increase. Investors should be cautious of potential price volatility and prepare for risk management.
Additionally, the upcoming Federal Reserve rate policy meeting is a key event this week. The market widely expects the Fed to announce a 0.25% rate cut on December 18. If this forecast holds true, it could further drive capital flows toward high-yield cryptocurrencies like Bitcoin, leading to further price increases.
Outlook for the Cryptocurrency Market
As Bitcoin and other major cryptocurrencies continue to rise, interest in the cryptocurrency market is growing. Beyond policy support and rate factors, underlying fundamentals are driving market development. For example, Bitcoin’s limited supply and advancements in blockchain technology are increasingly positioning it as "digital gold." Meanwhile, Ethereum’s widespread adoption in smart contracts and decentralized applications (DApps) reinforces its key role within the cryptocurrency ecosystem.
While short-term volatility may persist, the long-term outlook for cryptocurrencies remains promising. From institutional investors entering the space to central bank digital currencies (CBDCs) being developed, cryptocurrencies are transitioning from niche financial instruments to mainstream asset classes. For individual investors, staying informed about market dynamics and managing risk is crucial for achieving returns in this rapidly evolving space.
Key Tags:
Bitcoin, Cryptocurrency, Trump Policies, Federal Reserve Rate Cuts, Investment Strategies