Bitcoin's price surged past the $100,000 (€96,300) mark on Monday, marking a 4% increase and its first time crossing this threshold since 19 December. The rally was fueled by a sharp decline in the US dollar, yet its sustainability remains uncertain due to low trading volumes and the absence of a fresh catalyst.
The Numbers Behind Bitcoin's Surge
Bitcoin's resurgence came alongside significant inflows into spot Bitcoin exchange-traded funds (ETFs), totaling over $900 million (€867 million) on Monday. These inflows highlighted renewed investor interest in the cryptocurrency market. By early Tuesday during the Asian trading session, Bitcoin's price had slightly retreated, trading at $101,670 (€97,900) as of 4:30 AM CET.
Despite the rally, institutional buying volumes on platforms like Coinbase remained subdued, raising questions about the rally's long-term momentum.
US Dollar Weakness Provides Tailwind
Bitcoin's rally aligned with a sharp retreat in the US dollar. The dollar index fell over 1% intraday on Monday, marking its steepest single-day decline since 2023. This was triggered by a report suggesting a softening in the US tariff policy, which the President-elect later denied.
While the US dollar regained some losses, its initial decline buoyed global markets, including cryptocurrencies and stocks. The euro also posted its largest single-day gain against the dollar in 14 months. Analysts suggest that Bitcoin’s performance may face renewed pressure if the dollar strengthens ahead of Trump's inauguration.
A Rocky End to 2024 for Bitcoin
Bitcoin peaked at $108,000 (€104,000) on 17 December following a hawkish Federal Reserve interest rate cut. However, it ended 2024 down 16%, closing the year at $91,000 (€86,700) amid profit-taking and declining trading volumes during the holiday season.
The Fed’s decision to revise its Dot Plot projections and reduce expected rate cuts in 2025 dampened investor sentiment. While Bitcoin rebounded with Monday’s rally, trading volumes remained significantly lower than during the Fed’s December rate announcement.
Optimism for 2025 and Key Catalysts Ahead
Market participants remain optimistic about Bitcoin’s potential in 2025, with some expecting renewed momentum post-inauguration. Deribit’s options market showed heightened interest in calls for Bitcoin prices above $120,000 (€115,600), signaling investor expectations for a regulatory push favorable to cryptocurrencies.
President-elect Trump's pledge to make the United States "the crypto capital of the planet" and plans to include Bitcoin in the US strategic reserves could act as key catalysts. However, analysts warn that without fresh institutional interest and a strong catalyst, Bitcoin may struggle to sustain its current rally.
Source: Euronews
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