Bitcoin recovers from profit-taking retreat, surges past $107,000

Bitcoin rebounded strongly on Tuesday, recovering from earlier profit-taking and extending its record-setting rally. The world’s largest cryptocurrency surged past $107,000, hitting a session high of $107,148 before stabilizing at $106,940, marking a 5.43% gain since late Friday. This recovery comes as investor enthusiasm remains buoyed by President-elect Donald Trump’s reiteration of plans to create a U.S. Bitcoin strategic reserve and the inclusion of MicroStrategy into the Nasdaq 100 index.

Bitcoin is now up 150% in 2024, demonstrating its resilience and highlighting the robust demand for digital assets. Traders and analysts point to Bitcoin’s ongoing strength, with attention now turning to the next psychological milestone of $110,000.

Trump’s strategic BTC reserve boosts sentiment

Investor optimism continues to grow following President-elect Trump’s renewed commitment to making the United States a global leader in cryptocurrencies. Trump’s plan to establish a strategic Bitcoin reserve similar to the U.S. Strategic Petroleum Reserve, has sparked discussions about the role of digital assets in national reserves.

This isn’t the first time Trump has embraced Bitcoin. Earlier this year, at the Bitcoin 2024 conference, he promised to make the U.S. the “crypto capital of the planet”. During a recent interview with CNBC, Trump doubled down on his vision, stating, “We’re gonna do something great with crypto because we don’t want China or anybody else, we want to be the head.”

Globally, governments are already building cryptocurrency reserves. CoinGecko reports that governments collectively hold 2.2% of Bitcoin’s total supply, with the United States leading the pack at nearly 200,000 BTC, valued at over $20 billion. Other significant holders include China, Bhutan, the UK, and El Salvador. This trend reflects growing acceptance of Bitcoin as a strategic asset amid ongoing geopolitical and economic uncertainties.

MicroStrategy’s Nasdaq 100 inclusion fuels institutional demand

Bitcoin’s rally has been further amplified by the inclusion of MicroStrategy into the Nasdaq 100 index, effective December 23. MicroStrategy, led by CEO Michael Saylor, has emerged as the largest corporate holder of Bitcoin, positioning itself as a key proxy for institutional investors looking to gain exposure to the asset.

The inclusion of MicroStrategy into the tech-heavy index is expected to drive additional inflows into the company’s stock. As index funds and ETFs realign their portfolios to reflect the Nasdaq 100, more capital will flow into MicroStrategy, which has aggressively expanded its Bitcoin holdings through debt and equity offerings. This dynamic has the potential to create a positive feedback loop, with increased capital enabling further Bitcoin purchases, ultimately supporting Bitcoin’s price.

MicroStrategy’s stock has surged more than six-fold this year, reaching a market value of nearly $94 billion. Analysts view the inclusion as a significant step that reinforces institutional confidence in Bitcoin and highlights its growing role in traditional financial markets.

The road ahead: Bitcoin targets $110,000

Looking ahead, investors are closely watching Bitcoin’s trajectory as it approaches the next key level of $110,000. The combination of institutional inflows, geopolitical interest, and Trump’s pro-crypto stance has created a favorable backdrop for continued growth.

However, analysts caution that Bitcoin’s rally-while impressive-comes with heightened volatility. Profit-taking and speculative trading remain key risks in the near term. Additionally, while Trump’s Bitcoin reserve proposal has generated excitement, its implementation could face challenges and take significant time to materialise.

At the time of writing, BTC is holding just below $107,000 with unprecedented highs above that price level, firmly on the cards. With prices elevated above the 100-day moving average and a clear bullish price action narrative evident, we could see prices touch $110,000 soon.

However, RSI in overbought territory and prices slightly touching the upper boundary of the bollinger bands, hint at overbought conditions and a potential pull-back. A significant pull-back could see downward movement held at $104,619 and $101,872 price levels.

Source: Deriv MT5