By Thursday morning in Asia, Bitcoin (BTC) was trading at $400, edging closer to the psychological $100,000 mark. Reaching this milestone would push Bitcoin’s market capitalization beyond $2 trillion for the first time.

Source: BNC Bitcoin Liquid Index

“Trump Trade” and Policy Tailwinds Drive Momentum

Over the past two weeks, Bitcoin has surged nearly 30%, buoyed by a pro-crypto stance from the U.S. government and the Federal Reserve’s recent rate cuts, which have reignited traders’ risk appetite. Market participants are dubbing this rally the “Trump trade,” as stocks, bonds, and Bitcoin alike have gained in the wake of Donald Trump’s election victory.

Further fueling the rally is the swift uptake of BlackRock’s physically settled IBIT options. These options, which track Bitcoin prices, debuted strongly, reflecting rising institutional interest. The IBIT options launch shattered expectations, crossing $2 billion in trading volume on its first day. Singapore-based QCP Capital reported an impressive 73,000 contracts traded within the first hour, with a bullish call-to-put ratio of 4.4:1. This placed IBIT among the top 20 most active non-index options globally, signaling growing institutional confidence in Bitcoin as a viable asset class.

“This activity is likely to draw new investor demographics and foster diversified trading strategies,” QCP Capital noted. “Such developments could help reduce Bitcoin’s volatility and downside risks, cementing its position as a mainstream financial asset.”

With institutional adoption accelerating and policy shifts favoring crypto innovation, banks and analysts are now projecting Bitcoin prices to reach as high as $200,000 in the coming months. As Bitcoin hovers near $100,000, its upward trajectory underscores a shifting financial landscape, where digital assets are becoming indispensable in portfolios worldwide.

Meanwhile, speculation about pro-crypto leadership in regulatory positions, such as Teresa Goody Guillén potentially being considered by Trump for the SEC Chair, has bolstered sentiment.

Teresa Goody Guillén, Source: BakerHostetler

A looming short squeeze could supercharge Bitcoin’s rally. According to data from CoinGlass, approximately $5 billion worth of Bitcoin shorts are at risk of liquidation if BTC hits $100,000. Such liquidations could trigger a cascade of buying pressure, potentially driving prices even higher. Open interest in Bitcoin derivatives currently stands at a staggering $58 billion (equivalent to 626,520 BTC), underscoring the market’s heightened activity.

Institutional Adoption Fuels Momentum

The institutional embrace of cryptocurrency continues to reshape the landscape. BlackRock’s Bitcoin ETF options have already broken into the top 20 most active non-index options, signaling the growing acceptance of Bitcoin within mainstream finance. While 65% of cryptocurrency trading still occurs on platforms like Binance, OKX, and Deribit, this balance could shift as institutional players increase their market presence.

Analysts point to a mix of factors behind the sustained rally, including Donald Trump’s reelection, which has bolstered expectations for a more crypto-friendly regulatory framework. This optimism has extended to the broader crypto market, with its total valuation now surpassing $3 trillion, according to Brave New Coin. The combination of institutional participation, favorable policies, and a potential short squeeze sets the stage for further upward momentum in the market.

Meanwhile, Google Trends for Bitcoin have cooled, showing there is still no sign of euphoria in the markets.

Source: Google Trends