VanEck Report: Why is BTC Expected to Rise to $180,000 in This Cycle?

From the analysis of key indicators, when will the strong momentum of this Bull Market continue? This article is from the article "VanEck Mid-November Bitcoin ChainCheck" by Nathan Frankovitz and Matthew Sigel, compiled, translated, and written by Plain Blockchain. (Previous summary: Will MicroStrategy's doubling down on BTC brew the next big bubble?) (Background supplement: Rich Dad: Before 100,000 is the last chance to buy BTC, otherwise the rich and institutions will grab everything) With the regulatory benefits brought by Trump's election, BTC successfully broke through historical highs. With the continuous increase in market follow, various key indicators indicate that the strong momentum of this Bull Market is expected to continue. As we predicted in September, the price of BTC (BTC) showed a high fluctuation and rise after the election. Now, BTC has entered unknown territory without technical price resistance, and we believe that the next stage of the Bull Market has just begun. This pattern is similar to the doubling of the BTC price before the end of the year in 2020, and further rise of about 137% in 2021. With the significant change in government support for BTC, investor interest is rapidly increasing. Recently, we have received a surge in investment consultations, and many investors have realized that their allocation in this asset class is significantly insufficient. Although we closely follow whether there will be signs of overheating in the market, we still reiterate the forecast of the BTC price target of $180,000/BTC for this cycle, as the key indicators tracked show continuous bullish signals. BTC's PA market sentiment The 7-day moving average (7 DMA) of BTC reached $89,444, setting a new historical high. On Tuesday, November 5th, the night of the election, BTC soared by about 9%, reaching a new historical high of $75,000. This is consistent with our previous observation: when the possibility of Trump's victory increases, the price of BTC will rise accordingly. After Trump was elected president, regulatory resistance has turned into a driving force. Trump has begun appointing officials who support encryption in the executive branch, and the Republican Party's control of the joint government has increased the possibility of relevant support legislation being passed. Key proposals include the establishment of a national BTC reserve plan and the rewriting of encryption market structures and legislation related to Stable Coin. It is expected that FIT21 will be rewritten in market and privacy-friendly terms, and the new Stable Coin draft will allow state-chartered banks to issue Stable Coin without approval from the Federal Reserve. While countries like the BRICS countries are exploring alternative solutions such as BTC to bypass US dollar sanctions and coin manipulation, Stable Coin provides a strategic opportunity for the US to export the dollar globally. By eliminating regulatory barriers and allowing state-chartered banks to issue Stable Coin, the US can maintain the global influence of the dollar and utilize cryptocurrency for faster adoption in emerging markets. These markets have a strong demand for Financial Service, Hedging local coin inflation, and Decentralized Finance. We expect that SAB will be abolished within the first quarter of Trump's inauguration, either by the SEC or by Congress, which will prompt banks to announce Cryptocurrency custody solutions. In addition, by 2025, the US Ethereum (ETH) ETF will be revised to support staking, the SEC will approve the 19b-4 proposal for Solana (SOL) ETF, and the establishment and redemption of ETF in physical form will make these products more tax-efficient and liquid. Considering that Trump has previously recognized the commonalities between BTC Mining and artificial intelligence (AI) in energy-intensive areas, it is expected that energy regulations will be relaxed, leading to cheaper and more abundant base-load energy (such as nuclear energy), thereby promoting the US's global leadership in energy, artificial intelligence, and BTC. This election marks a turning point in the rise, reversing the capital and job outflows caused by previous hardline policies. By stimulating entrepreneurial vitality, the US is expected to become a global leader in encryption innovation and employment, turning Cryptocurrency into a key domestic growth industry and an important export product to emerging markets. BTC dominance The 7-day moving average of BTC dominance (a measure of BTC Market Cap relative to the total Cryptocurrency Market Cap) rose 2 percentage points to 59% this month, reaching its highest level since March 2021. Although the rising trend that started from 40% in November 2022 may continue in the short term, it may soon reach its peak. In September, we pointed out that Harris's victory could elevate its dominance due to a clearer regulatory position for BTC as a commodity. In contrast, Trump's support for encryption and his expanded cabinet team may drive more widespread investment in the encryption market. With BTC reaching new highs in an innovation-friendly regulatory environment, the wealth effect and regulatory risk reduction are expected to attract native capital and new institutional investors into Decentralized Finance, thereby enhancing the returns of smaller projects in the asset class. Regional trading dynamics At first glance, traders in the Asian market trading session this month appeared to significantly increase their BTC holdings, contrary to the trend in recent years where Asian traders were usually net sellers while European and American traders were net buyers. However, the surge in BTC prices on election night occurred during the Asian trading session, likely due to a large number of US investors trading around the election. This special event makes it difficult to attribute such price fluctuations entirely to regional dynamics. Consistent with historical behavior, traders in the US and European trading sessions continued to increase their BTC holdings, maintaining the price performance trend observed in October. Source: Glassnode, 11/18/24 (Past performance is not indicative of future results.) Key indicators To assess the potential rise space and duration of this Bull Market, we analyzed some key indicators to evaluate market risk levels and possible price tops. This month, our analysis started with Perptual Futures (perps), where the performance of the funding rate provides insights into market sentiment and helps measure the likelihood of market overheating. BTC prices typically show signs of overheating when the 30-day moving average funding rate (30 DMA Perp Funding Rates) exceeds 10% and lasts for 1 to 3 months. BTC average return compared to perpetual funding rate (January 4, 2020 - November 11, 2024) When the 30 DMA annualized Perps fee exceeds 10%, BTC price performance Data source: Glassnode, as of November 12, 2024 Since April 2020, we have analyzed the time periods when the 30-day moving average Perptual Futures funding rate exceeded 10%. The average duration of these periods is about 66 days, with an average return from open to close of 17%, although the duration of each period varies significantly. The only exception is the peak response on June 18, 2024, reflecting short-term market sentiment. In other cases, it lasted for several weeks, highlighting structural bullish sentiment, which usually brings significant short- to medium-term returns. For example, in August 2021 ...