Is $210,000 Bitcoin’s next high? Institutions think so

What’s behind Bitcoin’s historic rise to $108,000? From Trump’s speech to ETFs to MicroStrategy’s massive acquisitions, could there be a major institutional supply squeeze?

Bitcoin climbs to new highs

Bitcoin (BTC) has once again become the center of attention. On December 17, BTC climbed to an all-time high of $108,260, extending its post-US election gains to over 50%. As of this writing. As of September 17, it is trading at $106,663.

BTC 5-month price chart | Source: crypto.news

BTC’s rise follows President-elect Donald Trump’s proposal to establish a US Bitcoin strategic reserve, a concept that has sparked widespread excitement in markets.

Trump’s announcement, made during his speech at the New York Stock Exchange on December 12, aims to position the United States ahead of global competitors in the digital asset space. He noted that America should “do something great with crypto” and build reserves similar to its current strategic oil stockpile.

The idea of ​​a Bitcoin reserve is not entirely new. It was first introduced through the BITCOIN Act, sponsored by Republican Senator Cynthia Lummis, which calls for the US to acquire 1 million BTC over the next five years to help cover the growing $35 trillion national debt.

Another important factor driving this increase was the corporate activities of MicroStrategy, a firm synonymous with particularly aggressive Bitcoin accumulation.

Last week alone, MicroStrategy announced it had purchased $1.5 billion worth of BTC at an average price of $100,386 per coin. This latest purchase brings his total Bitcoin holdings to 439,000 BTC, worth $47 billion.

The company’s Bitcoin strategy has paid off big time, increasing its market value from $1.1 billion in 2020 to almost $100 billion today.

Additionally, MicroStrategy’s inclusion in the Nasdaq 100 index starting next week is expected to further increase demand for its shares as funds and ETFs rebalance their portfolios.

Meanwhile, Ethereum (ETH) did not lag behind this crypto craze. After a period of stagnation, ETH showed strong signs of life, rising to a seven-day high of $4,106 on December 16, with a 6% weekly gain.

Although Ethereum is facing a minor pullback due to profit booking, it remains stable around $3,950 as of the time of writing.

ETH 6-month price chart | Source: crypto.news

Let’s take a deeper look at the key developments driving Bitcoin and Ethereum, analyze the macroeconomic indicators shaping this bull run, and see what experts believe may happen in the coming days.

Corporate power play

Bitcoin and Ethereum are both showing strong momentum, but the underlying story becomes clearer when we look at ETF inflows, liquidations, and futures open interest.

Spot Bitcoin ETFs are doing very poorly this month. Consistent inflows have been seen every day since the beginning of December, raising over $5.16 billion as of December 16.

These inflows brought total assets under management for Bitcoin ETFs to $123 billion; This is a strong signal of confidence, especially from institutional investors.

But Ethereum ETFs tell a different story. Between the launch date of July 23 and December 3, inflows were modest, reaching only $733.6 million. Compared to Bitcoin’s performance, this figure seems very small. But the momentum has clearly shifted.

Since December 4, Ethereum ETFs have seen consistent inflows, adding $1.58 billion in a matter of days; This suggests that investors are likely warming to Ethereum thanks to its price performance and Bitcoin’s strong market leadership.

Liquidation data adds more context to what’s happening in the market. In the last 24 hours, as of December 17, $339 million worth of positions were liquidated in the crypto market; Long positions of $205 million and short positions of $134 million were deleted.

24-hour liquidation heat map | Source: CoinGlass

Total liquidations for Bitcoin were around $60 million; While short positions make up the majority at $30 million, $29 million in long positions shows that many traders who bet against Bitcoin’s rally were forced to exit their positions as BTC surpassed $108,000.

Ethereum saw even heavier liquidations totaling $78.5 million; Short positions took a bigger hit, again at $52 million; This again reflects how ETH’s recent price rise to $4,100 surprised many bearish investors.

Meanwhile, Bitcoin’s futures open interest (the total value of outstanding futures contracts) has grown tremendously. At the beginning of October, open positions were 32 billion dollars.

Following Trump’s election victory and the resulting bullish sentiment, this figure increased rapidly, reaching $55 billion in mid-November. Since then, open interest has continued to increase, reaching $70 billion as of December 17.

Increasing open interest along with rising prices is a bullish signal because it indicates that new money is flowing into the market and traders are placing further upside bets.

Simply put, Bitcoin’s rally is not running on fumes. ETF inflows are strong, futures activity is increasing, and short sellers are being pushed out of their positions.

While Ethereum has been slower to catch up, it is now benefiting from the same momentum, with increased ETF inflows and the liquidation of short positions.

Both assets appear to have a solid foundation for current uptrends; institutional money and futures markets are preparing to chart an upward trend.

Macroeconomic headwinds

The broader macroeconomic environment is currently mixed, with a weakening US Dollar, interest rate cut expectations and political turbulence in Europe creating uncertainty in global markets.

The USD, which has been strengthening for a while, is currently stalling. The November Retail Sales figure came in at 0.7%, beating expectations of 0.5%, but that wasn’t enough to inspire confidence. Excluding automobiles and transport, growth was a weak 0.2%, below the 0.4% forecast.

Add to this the downward revisions made in previous months, and it appears that consumer spending, which is the engine of the US economy, has slowed down.

This is directly tied to the Federal Reserve. The market almost certainly expects a 25 basis point rate cut on December 18. But the Fed’s tone has been cautious about 2025.

Expectations for aggressive interest rate cuts in the future are being dialed back, preventing the Dollar from falling further.

A stronger Dollar generally puts downward pressure on riskier assets, including Bitcoin, as investors generally view the USD as a safer bet. However, now the Dollar’s rise has paused, giving the crypto some breathing room.

At the same time, industrial production in the US contracted 0.1% in November, where analysts expected growth of 0.3%; This indicates that some sectors of the economy are in a difficult situation.

Combine this with the stagnation in stock markets (Asian and European stocks are down and US futures are losing around 1%) and we see a general reluctance towards traditional investments.

Historically, when traditional assets underperform and inflation remains under control, capital begins to flow into alternatives such as Bitcoin. However, an overall bearish outlook could increase volatility and stall the uptrend.

Meanwhile, political instability in Germany, where Chancellor Olaf Scholz lost a vote of confidence, and ongoing economic troubles in France are weakening the euro.

The fact that the Euro makes up 58% of the US Dollar Index directly supports the Dollar. But global uncertainty often pushes investors to seek assets independent of governments and central banks, such as Bitcoin.

Amid this, the US 10-year Treasury yield fell slightly to 4.38% from its recent peak of 4.43%. If yields continue to fall and interest rate cuts accelerate, borrowing will become cheaper and investors will begin to look for higher returns elsewhere.

Bitcoin and Ethereum could likely benefit from these scenarios as they are seen as high-yield alternatives, especially when trust in traditional markets is weak. But nothing is guaranteed.

What do experts think?

The ongoing Bitcoin and Ethereum rallies are creating the kind of pattern that has historically led to explosive price movements. Although momentum is strong, there are signals that investors should watch closely.

One of the most important observations is Bitcoin’s tightening supply dynamics. As Quinten puts it, “BlackRock consumes 9 times the daily mining supply”; This is a clear indication that institutional investors are snapping up Bitcoin faster than it can be mined.

BlackRock consumes 9 times the daily mining supply

Supply shock is coming and norms are still obeying

Corporate FOMO is just getting started

—Quinten | 048.eth (@QuintenFrancois) December 17, 2024

The supply shock narrative is gaining traction as spot Bitcoin ETFs now provide institutions with easy access to BTC. If institutions continue to accumulate at this rate, the supply squeeze could power BTC’s next rally.

Meanwhile, Ethereum is also showing signs of its own structural strength. According to Ali Martinez, Ethereum’s parabolic rises in previous bull cycles occurred as long-term holders moved from the belief phase to “greed mode.”

Currently, Ethereum is still in the early stages of belief, which suggests that the big move for ETH may still be ahead and is in line with the recent price performance of Ethereum, which has quietly climbed to $4,000 after months of stagnation.

Adding to this picture is Bitcoin’s MVRV ratio, a widely followed valuation tool. The MVRV ratio compares Bitcoin’s market value (current market cap) to its realized value (average purchase price based on on-chain data). Historical models show that BTC’s MVRV ratio peaked at 4.7x in 2017 and 4x in 2021.

As Presto Research notes, applying a conservative multiple of 3.5x to Bitcoin’s projected $1.2 trillion intrinsic value by Q3 2025 would bring BTC’s network value to $4.2 trillion, or about 210,000 per Bitcoin. can bring it to the dollar.

However, the road to these price levels will not be smooth. As Michaël van de Poppe points out, the upcoming meeting of the Federal Reserve brings an important wildcard.

New all-time high for #Bitcoin and a liquidity scan $ETH.

The Fed Meeting is approaching, which will likely cause a ton of volatility in the markets.

I wouldn’t be surprised if we see $110k and $95k in the same week.

— Michaël van de Poppe (@CryptoMichNL) December 16, 2024

While an interest rate cut is expected, the Fed’s statement may trigger volatility. Since monetary policy directly affects liquidity in financial markets, Bitcoin has often reacted sharply to central bank decisions.

In Poppe’s words, “I wouldn’t be surprised if we see $110,000 and $95,000 in the same week.”

If Bitcoin’s rally extends further and investor confidence spreads, Ethereum’s past tendency to lag behind and then catch up could reemerge.

Putting it all together, the current rally has strong fundamentals: institutional demand, tightening supply and improving market sentiment.

However, volatility remains present, especially as the Fed’s decisions approach and macro uncertainties still remain. Although the data points to an upward path, managing risk is crucial as we move deeper into this cycle. Always remember the golden rule: Never invest more than you can afford to lose.

Disclosure: This article does not constitute investment advice. The content and materials on this page are for educational purposes only.