With a pro-bitcoin (BTC) government taking the lead in the United States, the digital currency has begun to navigate a phase of sustained gains.
The investment firm Capriole Investments claims that, after years of undervaluation, bitcoin market prepares to reach $140,000.
“It is difficult to predict when fundamental barriers in its value will be broken,” its report notes, noting how bitcoin underwent eight months of volatility compression between $60,000 and $70,000 due to strong supply and persistent political uncertainty.
This stalemate ended on November 6 and, for Capriole, the impact of the recent elections in the United States – where Donald Trump was elected – has been key.
“This is the first presidential election that has had a significant impact on the price of bitcoin,” he explains.
Therefore, the market is starting to adjust bitcoin price towards fundamental valuescomparing it to assets like gold, with which bitcoin had lagged in appreciation, he points out.
According to Capriole, a “reset” of bitcoin against gold suggests that reaching $140,000 is probably “justified”.
However, the company warns that risks may arise along the way, but despite that “bitcoin and cryptocurrencies today have bluer skies than in years.”
What awaits bitcoin?
In the coming months, a distribution of $16 billion is anticipated from the bankrupt exchange FTX, which could inject new capital into the hands of bitcoin and cryptocurrency investorsaccording to Capriole.
FTX was one of the largest cryptocurrency exchanges before its collapse in 2022, leaving many investors in a precarious situation.
Additionally, the Trump administration has signaled its interest in establishing a strategic bitcoin reserve, which could make the United States an important buyer.
Capriole adds that this decision will have global implications. “As the United States adopts and supports bitcoin, other countries in the Organization for Economic Cooperation and Development (OECD) will eventually follow suit,” they point out, highlighting that this is a simple question of “game theory.”
On the other hand, corporate interest continues to rise. Microsoft has announced its intention to evaluate an investment in bitcoin. This was revealed in a filing with the Securities and Exchange Commission (SEC).
There it is detailed that will be a voting topic at the shareholders meeting that will take place on December 10as reported by CriptoNoticias.
Capriole highlights the performance of MicroStrategy, whose shares have outperformed all of the S&P 500. This could influence the decision of Microsoft shareholdersand according to the report, “sooner or later more of the ‘magnificent seven’ companies will add bitcoin to their balance sheet,” which would create a domino effect on the S&P 500.
Likewise, he anticipates that MicroStrategy could enter the S&P 500 index, which will attract billions of dollars to its shares and, consequently, more bitcoin purchases, thanks to spot bitcoin ETFs that would automatically adjust their holdings.
This scenario, he explains, will cause “forced purchases” that will further boost the price of bitcoin, in contrast to the “forced sales” that predominated until mid-2024.
Beware of excessive leverage
“When things look so good in technical and fundamental terms, the biggest short-term risk factor is excessive use of leverage, which could result in sudden liquidations,” the report states.
Capriole warns that Excessive leverage may be a risk as funding rates are approaching high levels. If the trend continues upwards, the market may be sustained for some time, but if these elevated funding rate levels continue for weeks and months, “we would be concerned and the risk of a significant price dump would be high.”
“If the current trend continues, the entire market is well positioned for 2025,” concludes Capriole Investments, reaffirming its optimism about the future of the industry.
Clarification: This article is written for informational purposes. It does not constitute an investment recommendation or financial advice. Each investor is responsible for conducting his or her own research.