Bitcoin rockets to $85,000 as Trump’s return and Fed rate cuts spark predictions of a $420,000 peak

As Bitcoin rises to $85,000, could Federal Reserve cuts and Trump’s pro-crypto agenda push it to $420,000? What do experts say about the future of Bitcoin in this market?

Bitcoin reached an all-time high

On November 11, Bitcoin (BTC) broke the $80,000 barrier and reached an all-time high of nearly $85,000 after a nearly 25% increase in a week.

BTC 6-month price chart | Source: TradingView

Bitcoin’s massive rally is in line with recent monetary policy adjustments from the Federal Reserve, which cut interest rates by 25 basis points at its November meeting, following a 50 basis point cut in September, bringing US interest rates to a range of 4.5-4.75%.

Low interest rates often mean cheaper borrowing costs, potentially freeing up capital and encouraging investment, often benefiting risky assets like Bitcoin.

Adding to the current bullish sentiment, the recent US presidential election further boosted market optimism with the return to office of former President Donald Trump, known for his positive stance on crypto.

Despite this momentum, investors appeared cautious in early November. Between November 1 and November 5, there was an outflow of approximately $715 million in spot Bitcoin ETFs, increasing uncertainty about the election outcome.

However, following the election results, market confidence increased, leading to new inflows into Bitcoin ETFs. From November 6 to November 8, these funds accumulated over $2.28 billion in total assets under management, according to CoinGlass data.

Meanwhile, Bitcoin’s market dominance (the share of the total crypto market held by BTC) has also seen fluctuations.

When Bitcoin reached $75,000 last week, its dominance rose to over 60.5% and then fell to 58.5%. It has since recovered and stands at 59.6% as of this writing.

BTC dominance chart (2022-now) | Source: TradingView

These ups and downs in Bitcoin’s dominance could signal increased interest in altcoins as capital returns, potentially signaling early signs of an upcoming altcoin season even as Bitcoin climbs.

The big question now is: Can Bitcoin continue to set new records, or are we approaching the peak of this cycle? Let’s explore.

Bitcoin’s open positions reached record levels

As Bitcoin continues its record-breaking run, fundamental metrics offer valuable insight into the potential direction of the market.

Among these, Bitcoin Futures open positions stand out, reaching an all-time high of $51.3 billion as of November 11. In simple terms, open interest reflects the total value of outstanding Bitcoin futures contracts that have not yet been settled.

These futures contracts are agreements between buyers and sellers to trade Bitcoin at a predetermined price on a future date. High levels of open interest indicate that large capital is betting on the future price of Bitcoin.

However, this high level of open interest also indicates increased volatility. When significant capital is tied up in futures, even small price fluctuations can trigger large-scale liquidations.

In the 24 hours leading up to November 11, $165 million worth of Bitcoin futures positions were liquidated. Liquidations occur when investors using leverage (borrowed funds) can no longer support their positions due to adverse price movements. In such cases, exchanges automatically close these positions to limit further losses.

BTC 24-hour liquidation heatmap | Source: CoinGlass

Of the $165 million liquidated, $37 million was in long positions (bets that the Bitcoin price would rise), while $128 million was in short positions (bets that it would fall).

This imbalance, along with a larger share of liquidations on short positions, shows a classic short squeeze: As the price of Bitcoin rises unexpectedly, traders who bet against it are forced to buy back Bitcoin to cover their positions, pushing the price further up. Adds directional pressure.

The all-time high in open interest, coupled with the massive liquidation of short positions, indicates continued bullish momentum. Bitcoin could move higher as more futures contracts are opened and short positions are closed.

Bullish momentum, strategic reserves and a warming Market

Bitcoin’s recent rally has fueled bullish sentiment in the financial and political spheres.

Institutional interest in Bitcoin has never been stronger, with investment giants like Bernstein, an asset management firm with $800 billion under management, offering bold advice to clients.

In his latest report, Bernstein advised investors to “buy all you can” and warned of the risks of underexposure to crypto assets.

Bernstein (800 billion AUM) issued its note to clients on Monday morning:

“Welcome to the crypto bull market. Buy everything you can. Don’t fight it; add crypto exposure ASAP.”

Phase 3 is truly upon us. pic.twitter.com/ZGLoLvtXJD

— Yano 🟪 (@JasonYanowitz) November 11, 2024

Beyond the financial sector, political support for Bitcoin is also intensifying. Leading this charge is Wyoming Senator Cynthia Lummis, famously known as the “Bitcoin Senator.”

Lummis, a long-time supporter of cryptocurrency, recently reiterated his commitment to making Bitcoin part of the national economic strategy on social media, saying, “WE WILL BUILD A STRATEGIC BITCOIN RESERVE.”

WE WILL CREATE A STRATEGIC BITCOIN RESERVE 🇺🇸 🇺🇸 🇺🇸

— Senator Cynthia Lummis (@SenLummis) 6 November 2024

From a technical perspective, some analysts are predicting a potential pullback in the near term. Michaël van de Poppe, a widely followed crypto analyst, recently stated that a “bump” in futures positions could be imminent as Bitcoin’s price reaches $81,000.

“Massive futures positions are open and I think we will see some volatility next week before resuming the uptrend,” he said.

#Bitcoin It reached 81 thousand dollars.

Magnificent times await us.

But huge futures positions are open and I think we will see a rally next week before resuming the uptrend.

These raids are tremendous opportunities. pic.twitter.com/o7xBCvC6uB

— Michaël van de Poppe (@CryptoMichNL) November 11, 2024

This scenario does not necessarily indicate a problem; In fact, a short correction or consolidation can create new opportunities for investors to enter the market or for those on the sidelines to expand their positions.

Essentially, while the short-term outlook remains positive, investors need to be mindful of the potential cooling-off period that follows periods of exuberant uptrends.

Is Bitcoin heading to new highs?

As Bitcoin’s momentum strengthens, predictions are also pouring in, from predictions based on historical patterns to advanced prediction models.

Respected analyst Gert van Lagen recently observed that Bitcoin is “breaking out parabolically from Base 4” and suggested that this “blast wave” could push Bitcoin’s price into the $220,000 to $320,000 range, though he has yet to offer a specific timeline.

$BTC [1W] – Update on step-like formation.

The price broke out of Base 4 parabolically, confirming the setup reaching the $220K to $320K target zone.

⑤ The 5th explosion wave within (5) has started, full verification!

Keep laughing at me 😋 pic.twitter.com/GIwq5D9lEK

— Gert van Lagen (@GertvanLagen) November 11, 2024

In addition to the bullish view, Bitcoin Magazine Pro cited the widely discussed stock-to-flow model, which predicts that Bitcoin could reach a staggering $420,000 by April 2025.

Popularized by analyst PlanB, the S2F model takes advantage of Bitcoin’s fixed supply and the increased scarcity that follows each halving event to predict prices.

Although it has faced criticism for occasional deviations, the long-term accuracy of the model has ensured that it remains popular within the crypto community.

Meanwhile, veteran trader Peter Brandt, known for his extensive market experience, also predicts a bullish path for Bitcoin.

Brandt suggests that Bitcoin’s price movements from January to March 2024 may merely mark the beginning of a “Branding” phase; At this stage, in his own words, “BTC is working – working.” Based on this phase alone, Brandt predicts that Bitcoin could reach $125,000 by the end of the year.

Bitcoin gives everyone a chance to buy break from March to October 24
Once BTC decides to “Brand” it never looks back
It works when BTC works throughout its history
Based on Jan-March ’24 working ONLY as a “time/price” Bayesian probability “previous”, price could reach $125k by New Year’s pic.twitter.com/HCiKKojDkA

— Peter Brandt (@PeterLBrandt) November 10, 2024

Adding to this perspective, another respected voice in the crypto world, Ki Young Ju, pointed out that “BTC futures market indicators” are currently showing signs of overheating.

I was expecting corrections as BTC futures market indicators are overheating, but we are getting into price discovery and the market is heating up even more.

If correction and consolidation occur, the bull run may extend; However, a strong year-end rally could prepare 2025 for a bear market…

— Ki Young Ju (@ki_young_ju) November 10, 2024

He suggests that although we are in a strong “price discovery” phase, a correction and consolidation cycle could continue the current bull run, implying that BTC could fall to $58,000 by the end of the year.

With a mix of historical patterns, predictive models, and Bitcoin’s supply-driven scarcity, the market appears to be entering a phase of unprecedented possibilities.

But as prices climb and models predict very different targets, the journey to these levels will likely be marked by a series of corrections and swings. Investors are advised to trade wisely, consult a financial advisor, and invest only what they can afford to lose.