Bitcoin has made headlines by blasting past $108,000. On Dec. 17, it reached an all-time high of $108,260, with post-U.S. election gains exceeding 50% and trading around $106,663 as of writing. The rally was spurred by President-elect Donald Trump’s proposal to create a U.S. Bitcoin strategic reserve, similar to the strategic oil stockpile. This concept, first introduced in the BITCOIN Act by Senator Cynthia Lummis, aims to address the national debt. Institutional activity, especially MicroStrategy’s $1.5 billion purchase of BTC at an average of $100,386 per coin this past week, has also been a major driver. MicroStrategy’s total holdings now stand at 439,000 BTC, worth around $47 billion, and its inclusion in the Nasdaq 100 index next week is expected to boost demand.
Ethereum hasn’t been left behind. After a period of stagnation, it climbed to a seven-day high of $4,106 on Dec. 16, with a 6% weekly gain, though it has seen some retracement and is currently around $3,950.
Institutional forces are at play. Spot Bitcoin ETFs have had consistent inflows since December, reaching over $5.16 billion by Dec. 16 and pushing total assets under management to $123 billion. Ethereum ETFs initially had modest inflows but have seen a pickup since Dec. 4, adding $1.58 billion. Liquidation data shows that in the last 24 hours, $339 million worth of positions were liquidated across the crypto market, with Bitcoin and Ethereum shorts taking significant hits as prices rose. Bitcoin’s futures open interest has grown from $32 billion in early October to $70 billion by Dec. 17.
The macroeconomic environment is complex. The U.S. dollar is weakening, with November Retail Sales figures showing a slowdown in consumer spending. The market expects a 25-basis-point rate cut on Dec. 18, but the Fed’s tone for 2025 is cautious. U.S. industrial production contracted in November, and equity markets are sluggish. Political instability in Europe, such as in Germany and France, is affecting the euro. The U.S. 10-year Treasury yield has pulled back slightly.
Experts believe Bitcoin’s supply dynamics are tightening, with institutions like BlackRock snapping up BTC faster than it’s mined. Ethereum is in the early stages of a potential major move. Bitcoin’s MVRV ratio suggests a possible price target of $210,000 per Bitcoin. However, the Fed’s upcoming meeting could introduce volatility, with expectations of price swings between $110K and $95K in a single week. The current rally has strong institutional and market sentiment support but is accompanied by significant volatility and uncertainty.
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