Bitcoin remains firmly below the $100,000 threshold, halting a rapid rally that brought the cryptocurrency close to this significant psychological milestone.

Since the U.S. election on November 5, when Donald Trump was re-elected as president, Bitcoin has surged more than 40%. Although Trump’s inauguration is set for January 20, 2025, his pro-crypto rhetoric has driven market optimism.

Last week, Bitcoin reached a new all-time high, briefly surpassing $99,000. However, it has since paused, trading at approximately $98,243.25 early Monday, according to CoinGecko—marking a slight increase on the day.

Profit-Taking by Investors

Andre Dragosch, head of research for Europe at Bitwise, a crypto-focused asset management firm, suggested that Bitcoin’s failure to breach the $100,000 mark may be due to investors taking profits after the strong post-election rally.

Dragosch noted that long-term holders have begun to sell substantial amounts of Bitcoin during the rally, preventing further price movement. He anticipates a short-term break in the rally, as investor sentiment remains high and market positioning seems stretched. However, he believes this may be a correction in a broader bull market, as Bitcoin’s valuations are still far from excessive. The tightening supply of Bitcoin, especially following the recent halving event, should continue to support prices through 2025, he added.

Excess Leverage and Potential Correction

Mark Novogratz, CEO of Galaxy Digital, stated last week that while he believes Bitcoin reaching $100,000 is “inevitable,” a pullback is to be expected due to the high levels of leverage within the system.

“The crypto community is levered to the gills,” Novogratz remarked in an interview with CNBC, predicting a correction. He recommended investors focus on purchasing “straight bitcoin” rather than Bitcoin-exposed companies like MicroStrategy, which holds a significant amount of Bitcoin in its reserves. Novogratz also noted the impact of a large unknown seller who has been unloading significant amounts of Bitcoin, which may be contributing to downward pressure on the price.

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What’s Next for Bitcoin?

David Morrison, senior market analyst at Trade Nation, acknowledged that while $100,000 is an attractive milestone, it now appears to be a significant hurdle for further price increases. If Bitcoin starts to decline from this point, Morrison suggested that we may have seen the peak, especially if long-term holders decide to cash out. However, he also pointed out that there is a strong likelihood that the upside momentum could regain traction, potentially driving Bitcoin through the $100,000 level.

Marion Laboure, a strategist at Deutsche Bank, emphasized that while Trump’s pro-crypto stance is favorable, significant federal crypto legislation is still distant. Trump’s plans include positioning the U.S. as a global crypto hub, creating a national crypto stockpile, and replacing SEC Chair Gary Gensler, who is set to resign in January 2025. However, Labor believes that such ambitions face significant practical challenges, particularly since any major reforms would require Congressional approval. Despite this, she views regulation as a net positive for the crypto industry in the long term.

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