Bitcoin has made notable gains recently, with its price edging closer to the coveted $100,000 mark. As of early Wednesday, the world’s largest cryptocurrency rose by 1.6%, reaching $98,002. However, even though Bitcoin briefly touched six figures last week, it remains just shy of the significant threshold. With Bitcoin at a critical juncture, many investors are wondering whether the token can break past $100,000 in the near future.
In this post, I’ll dive deep into why Bitcoin is having difficulty retaking $100,000 and explore the factors that could push the price higher or keep it stuck below this psychological resistance.
Bitcoin Price Trends and Current Performance
Bitcoin has been on a solid rally, spurred by optimism in the crypto market, particularly in the wake of potential changes in US crypto regulations under the incoming Trump administration. Additionally, the approval of spot Bitcoin ETFs has drawn in institutional investors, further fuelling the surge.
As of this writing, Bitcoin is hovering around $98,002, just 2% below the $100,000 mark. For context, this is significant because it marks the first time in history that Bitcoin has hit the six-figure price—a milestone that many believed was inevitable but still elusive. Despite the bullish momentum, Bitcoin’s price is currently facing psychological resistance at the $100,000 mark, which could mean it will take some time before Bitcoin moves beyond this point again.
Why Bitcoin is Struggling to Break $100,000
Let’s break down why Bitcoin is struggling to climb past $100,000. While there are several factors at play, the primary reasons can be summarised as follows:
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Psychological Resistance: The $100,000 level is a major psychological barrier for Bitcoin investors. This “round number” is often seen as a point where long-term holders may look to trim their positions or take profits. As Alex Kuptsikevich, an analyst at FxPro, pointed out, the $100,000 threshold has created a psychological resistance, similar to when Bitcoin struggled to break $20,000 in late 2020.
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Profit-Taking by Long-Term Holders: As Bitcoin nears major milestones, there is a tendency for early investors and long-term holders to sell some of their positions. This selling pressure can prevent the price from continuing its upward trajectory. With Bitcoin approaching $100,000, many long-term investors may be cashing out their profits.
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Increased Market Volatility: Cryptocurrencies, including Bitcoin, are notorious for their high volatility. While Bitcoin has risen substantially, its price is still highly susceptible to fluctuations, especially with external market factors such as government regulations and global financial conditions. This makes it harder for Bitcoin to sustain prices above significant psychological levels.
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Institutional Caution: While institutional investors have shown interest in Bitcoin, especially with the rise of spot Bitcoin ETFs, there remains caution. Many institutions prefer to wait for more market stability and regulatory clarity before making large-scale investments. This could explain why the surge towards $100,000 hasn’t been sustained yet.
Factors That Could Push Bitcoin Over $100,000
Despite the resistance at $100,000, there are factors that could drive Bitcoin’s price beyond this point. Here are some of the key drivers:
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US Crypto Regulation: The possibility of the Trump administration cutting back on cryptocurrency regulations has been a major source of optimism in the market. Investors are hoping for more favourable conditions for crypto investments, including tax breaks and relaxed regulations for businesses and individual investors. This could increase institutional and retail investor interest, propelling Bitcoin’s price upward.
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Bitcoin ETFs: The approval of spot exchange-traded funds (ETFs) that track Bitcoin’s price has been a significant development. Spot ETFs have opened the floodgates for institutional capital into the crypto market. This trend is likely to continue, leading to more upward pressure on Bitcoin’s price.
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Mainstream Adoption: As more companies and institutions adopt Bitcoin as a legitimate form of payment or investment, the demand for Bitcoin could surge. Companies like MicroStrategy, which continues to buy Bitcoin in large quantities, signal a broader acceptance of Bitcoin as a store of value.
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Increasing Global Inflation: Bitcoin has been increasingly seen as a hedge against inflation. With rising inflation concerns globally, many investors are looking to Bitcoin as a safe haven. This increased demand could push Bitcoin towards new highs.
MicroStrategy: Bitcoin Proxy for Investors
One key player in the Bitcoin space is MicroStrategy, a business intelligence company that has become somewhat of a proxy for Bitcoin investing. MicroStrategy’s CEO Michael Saylor has been a vocal advocate for Bitcoin, and the company has been aggressively purchasing Bitcoin for its balance sheet.
MicroStrategy’s recent $2.1 billion Bitcoin purchase increased its holdings to a staggering 423,650 Bitcoins, representing more than 2% of the total Bitcoin supply. As MicroStrategy’s stock follows Bitcoin’s price movements, its recent decline of 7.1% is reflective of market hesitancy. However, with 1.4% gains in premarket trading, investors are hopeful that the stock will recover as Bitcoin continues to rise.
For investors, watching MicroStrategy’s Bitcoin buying spree could provide insight into the broader market’s sentiment and whether Bitcoin can successfully breach the $100,000 barrier in the near future.
Bitcoin and Institutional Investment: The Role of ETFs
The approval of Bitcoin ETFs has been a game-changer for institutional investors looking to get exposure to Bitcoin without directly holding the cryptocurrency. Spot ETFs, which track the real-time price of Bitcoin, allow investors to buy and sell Bitcoin on traditional stock exchanges.
This growing interest from institutional players is a positive sign for Bitcoin’s future. If more ETFs are approved and institutional interest continues to rise, Bitcoin’s price could potentially push past the $100,000 barrier in the coming months.
Conclusion: Will Bitcoin Reach $100,000 Again?
Bitcoin’s current performance, hovering just shy of the $100,000 mark, has generated excitement among investors and traders alike. However, as we’ve seen, psychological resistance and profit-taking from long-term holders may keep the price from breaking past that crucial level in the immediate future.
That said, institutional investment, favourable regulatory changes, and mainstream adoption are likely to continue pushing the price upwards. Whether or not Bitcoin breaks the $100,000 barrier soon depends largely on these factors, but one thing is clear—Bitcoin remains a hot commodity in the financial world, and its journey to $100,000 is far from over.
Relevant Links for Further Reading:
- Bitcoin Price Analysis
- MicroStrategy Bitcoin Investments
- Bitcoin ETFs Explained
- Trump Administration and Cryptocurrency
- Spot Bitcoin ETFs Impact on Market
Photo credit: Mint
