The crypto market has paused its rocket rally, which began a week ago following the US election, but investors should anticipate it to resume soon.
On Tuesday, bitcoin fell by 1% to $87,440.88, according to Coin Metrics. On Monday, it increased by more than 10%, reaching as high as $89,623.00 at night. Many investors predict its price to continue setting new milestones as it approaches $100,000 later this year.
Bitcoin has climbed by more than 26% since election day on November 5, when it set a new high for the first time since March. Ether fell 3% on Tuesday, following a 33% increase the previous week.
"Bitcoin is now in price discovery mode after breaking through all-time highs early last Wednesday morning when it was officially declared that Trump won the election," said Mike Colonnese, an H.C. Wainwright analyst. "Strong positive sentiment is likely to persist through the balance of 2024 and [we] see bitcoin prices potentially reaching the six-figure mark by the end of this year."
Crypto investors have applauded President-elect Donald Trump's vows to make the regulatory environment more supportive and even sympathetic to crypto enterprises, which have long suffered from a lack of clarity on the rules of the road.
While bitcoin has long been considered a secure asset in Washington, meaning it is not subject to securities rules, the long tail of cryptocurrencies and crypto-related firms has operated in a dangerous grey area.
"That's just shifted 180 degrees," Matt Hougan, chief investment officer at Bitwise Asset Management, told CNBC. "We're now in a positive regulatory environment, we now have tailwinds from that, and that comes in the case of a market that was already in a bull market … that's going to push us higher."
Across The crypto market, coins that had risen in the previous week hit the brakes on Tuesday, including meme coin Shiba Inu, which fell 4% after rising 57% in the previous week.
Dogecoin was an oddity. It's been one of the biggest winners, up more than 135% since November 5, most likely due to its ties to Elon Musk, who helped elect Trump. It was last up by 14%.
Coinbase and MicroStrategy both experienced a 6% decline in premarket trading. Coinbase gained 19% in normal trading on Monday, trading above $300 for the first time since 2021 and down roughly 6% from its previous high.
Traders and economists think that the recent bounce is simply beginning.
"It does seem like there's an air gap between the previous [bitcoin] all-time highs around $72,000 and $100,000," Hougan told me. "It's difficult to understand what would prompt sellers to enter this market and halt the momentum before we reach that level. Obviously, there are no promises. Although there may be pullbacks, the cryptocurrency market is entering a new cycle. I believe we are correct to be bullish, and the bias remains to the upward.
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