Bitcoin melts faces, eyes US$100K by Christmas and overtakes gold as ETF inflows surge

Bitcoin keeps hitting new highs, with investors eyeing $100K by December amid nation-state buying rumours and US reserve talks.

Bitcoin is, like, so hot right now. Picture via Getty Images

• Bitcoin tops $89k, with bets on $100k by December

• Rumours of a nation-state quietly buying Bitcoin

• US mulling a a strategic Bitcoin reserve

Bitcoin's on fire, and it seems there’s no stopping it. Overnight, the original crypto burst up to top an all-time high above $US87,000.

Records don't last long when Bitcoin's in this mood. In fact, at the time of writing, it has leapt over both the $US88k and $US89k fences in quick succession.

The surge follows two months of consistent gains, driven by optimism around the US presidential election and, in particular, the unexpected (by many, although that very much depends on which media you consume) return of Donald Trump to the White House.

This has reignited optimism among coin traders, many of whom are now betting that Bitcoin could soar to $US100,000 by the end of the year.

A significant portion of these wagers are linked to Bitcoin options expiring in late December, with the $US100,000 call option emerging as the largest bet in the market right now.

Data from crypto options exchange Deribit reveals that the largest call options position is set for the December 27 expiry, with a strike price of $US100,000.

As of Monday morning in London, there were around 9635 Bitcoin—roughly $US780 million—in open interest betting on Bitcoin hitting $US100,000 by December 27, says Deribit.

For those unfamiliar, open interest refers to the total number of outstanding contracts that have not yet been settled. It represents the sum of contracts that investors have placed but not yet closed.

This massive open interest is by far the largest bet placed for that expiry date, with the chances of the trade paying off estimated at 18.6 per cent, according to Deribit.

Meanwhile, the total Open interest in Bitcoin futures globally, recently reached nearly $US50 billion for the first time in history, with continued buyer dominance observed since the weekend.

Gold ETF overtaken

The broader economic environment in the US is also benefiting Bitcoin’s rally.

The Federal Reserve’s recent interest rate cut has helped create an environment that favours risk assets such as Bitcoin.

The Fed is expected to continue its rate-cutting cycle at its December meeting, with a 70 per cen t chance of another quarter-point cut.

The bullish momentum has led to a substantial influx of capital into Bitcoin exchange-traded funds (ETFs).

Since Trump’s victory, over $US2 billion has been pumped into Bitcoin ETFs. Last week, BlackRock's $US35 billion iShares Bitcoin Trust saw a record daily net inflow of nearly $1.4 billion.

The fund has now overtaken the $33 billion iShares Gold Trust in total assets, as investors increasingly view Bitcoin as the new "digital gold."

The broader cryptocurrency market has also seen a similar surge, with altcoins like Dogecoin experiencing big spikes in recent weeks.

Rumours of nation-state buying

In another development, US Senator Cynthia Lummis has doubled down on her plan to establish a strategic US Bitcoin reserve, following Donald Trump’s election victory.

Lummis, who introduced the Bitcoin Act in July, has proposed that the US Treasury acquire 1 million Bitcoin over five years – approximately 5 per cent of Bitcoin’s total supply – to hedge against the debasement of the US dollar and help reduce the national debt, which currently stands at over $US35 trillion.

If successful, Lummis believes the reserve could help the US pay off half of its debt by 2045.

However, establishing such a reserve would require passing legislation through Congress, and while a Republican-led government may support it, significant opposition from within the GOP remains, as many still view Bitcoin as too risky for the government to hold.

Rumours have also been circulating  that a "nation-state" has been quietly acquiring large amounts of Bitcoin, potentially making it one of the top five Bitcoin holders.

The speculation has been fuelled by cryptic statements from industry experts such as David Bailey, who hinted that a country is making a strategic move to buy Bitcoin.

There is at least one nation state that has been actively acquiring Bitcoin and is now a top 5 holder. Hopefully we hear from them soon.

— David Bailey $0.85mm/btc is the floor (@DavidFBailey) November 9, 2024

He didn't say who, but we do know that countries such as China and Ukraine already hold significant amounts of Bitcoin as part of their strategic reserves.

Bitcoin bulls stay cautious

But even with all this optimism, there are some important things to keep in mind.

Bitcoin’s funding rate, which indicates the premium paid for new long positions in Bfutures, has been creeping up since Trump’s election win. However, it still remains well below its 2024 peak, signalling that some traders are proceeding with caution.

There are concerns about how much attention Trump will give to the cryptocurrency sector once he takes office, particularly with the various global crises and trade tensions demanding his focus.

Trump has made it clear that he wants to remove the biggest barriers to crypto adoption. He has pledged to fire SEC Chairman Gary Gensler, a known anti-crypto figure, on his first day back in office.

"Trump promised during his election campaign to remove the most significant obstacles to wider adoption of cryptocurrencies, namely regulatory and legislative hurdles," says Samer Hasn at XS.com.

Many now believe that legislation to remove restrictions on crypto could soon be on the horizon.

But for now, the combination of Trump’s promises, favourable economic conditions, and increased institutional interest are all propping up BTC's price.

“Markets are buying the more optimistic narrative and continuing to push higher amid unprecedented momentum,”said Hasn.

Originally published as Bitcoin melts faces, eyes US$100K by Christmas and overtakes gold as ETF inflows surge