Bitcoin prices soar: Where is the cryptocurrency headed as Trump inauguration drives rally?

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Bitcoin, which on Monday soared to a record of more than $109,000 ahead of US president-elect Donald Trump's inauguration, is likely to go much higher, say analysts.

The world’s largest cryptocurrency rallied amid expectations that Mr Trump's policies will promote the adoption of digital assets. Bitcoin was trading at $106,014.33 at 4.42pm UAE time on Monday.

"Bitcoin’s recent breach of $109,000 on Monday is a historic milestone, and I firmly believe this is only the beginning," said Nigel Green, chief executive of wealth management company deVere Group.

"We forecast that it could surge to $150,000 by mid-2025, driven by a confluence of factors including a pro-crypto Trump administration, heightened institutional investment, growing retail enthusiasm, and favourable regulatory developments globally. The ongoing momentum suggests that Bitcoin is cementing its status as a dominant global asset class," he said.

Bitcoin had a stellar 2024, more than doubling from $44,000 to top $100,000 for the first time on the back of Mr Trump's White House win and the launch of Bitcoin sport exchange traded funds (ETFs) in January last year.

"Trump has vowed to make the US a crypto capital for the world, with policies that push for the establishment of a strategic Bitcoin stockpile," said Vijay Valecha, chief investment officer at Century Financial.

"Crypto is here to stay, with eight states in the US introducing bills proposing crypto reserves, along with at least 13 more states preparing for similar legislation. Additionally, supporting the rally, net inflows of $1.86 billion were reported by US Bitcoin spot ETFs last week, taking the total net flow to $2.42 in the new year."

In the short term, according to Fibonacci extension levels, prices could see the $132,000 level as the first target, with a further target at $149,778, close to the psychological $150,000 level mark, Mr Valecha said.

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Crypto markets perform in line with risky assets, and Bitcoin has performed best during improving US liquidity conditions, said Manuel Villegas, digital assets analyst at Julius Baer. "Overall, crypto markets are positively positioned ahead of Trump’s inauguration, the outlook on policy changes is big, and volatility is unlikely to subside anytime soon.

"That said, ETF flows are moving ahead of the inauguration, anticipating a little bit of ‘hot sauce’ to further warm up markets," he added. Julius Baer's outlook for the first quarter "remains stable, contingent on sustained demand and constrained supplies, with swings exacerbated by the macroeconomic environment", Mr Villegas said.

Mr Green also cautioned that investors must remain strategic amid the boom in crypto prices, keeping a focus on diversification and a long-term perspective. “While the current rally is incredibly promising, it’s important to note that it won't be a straight line to $150,000," he said.

"Market corrections are inevitable as investors periodically lock in profits, but these pullbacks are not a sign of weakness. Instead, they represent opportunities for longer-term growth, as the underlying fundamentals – such as institutional adoption and geopolitical demand – remain robust.”

Mr Trump was once a crypto sceptic. In his first term, he derided Bitcoin and its peers as “not money”, “based on thin air” and something that “can facilitate unlawful behaviour, including drug trade and other illegal activity”. He also described it a scam after he left office in 2021. However, in the months before and after his election this time around, he said he was considering an executive order designating cryptocurrencies as a “national priority”.

"We're gonna do something great with crypto because we don't want China or anybody else – not just China but others are embracing it – and we want to be the head," Mr Trump told CNBC in December. In response to a question on his plans to build a crypto reserve similar to oil reserves, he said: "Yeah, I think so."

The number of new meme coins and their value have jumped since Mr Trump’s election victory in November. Industry executives are hoping the incoming administration will adopt a friendlier approach to crypto assets. Along with his sons, Mr Trump has also endorsed World Liberty Financial, a crypto venture set up by his longtime business partners and others.