Analysts suggest a perfect storm of factors has firmly positioned bitcoin in the price discovery phase, with a continued significant surge now a real possibility.
At the close of business on Friday, bitcoin was trading around US$98,000, after briefly coming within US$900 of the US$100,000 mark earlier in the day.
Speaking to InvestorDaily, Coinstash co-founder Mena Theodorou said that bitcoin surpassing US$100,000 would mark the “next major psychological resistance” for the cryptocurrency.
“Bitcoin’s momentum remains strong. Having surpassed its previous all-time high, it is now officially in a price discovery phase,” Theodorou said.
According to Theodorou, the surge in bitcoin’s value isn’t driven by a single factor. While Donald Trump’s election victory has sparked positive sentiment, traders are also benefiting from record bitcoin ETF flows, growing institutional investment, and the potential for increased deregulation.
Theodorou said that, as things currently stand, higher targets by the end of 2024 are now within reach. However, he said that market volatility means these projections should be viewed as reference points rather than certainties, given the broader macro-economic influences at play.
“There’s definitely a lot of optimism in the crypto market, but one big concern right now is the buildup of leverage. When traders start using too much leverage, especially in a volatile space like crypto, they’re at a higher risk of serious losses if prices swing suddenly. This can lead to forced liquidations, which only adds more instability to the market,” he said.
“So, while things are looking positive overall, it’s essential to approach leverage carefully. Keeping it in check is key to a healthy, stable market. In short, it’s close to full steam ahead, but with a watchful eye on risk.”
Josh Gilbert, market analyst at eToro, said that drawdowns are typical for bitcoin, making significant corrections a common occurrence for the asset.
“It’s key for investors to remember that an asset doesn’t go up in a straight line forever,” he told InvestorDaily.
Nonetheless, Gilbert believes that it would take “something big” to slow down the coin’s rally.
“Bitcoin’s run of record highs doesn’t seem to be done for the year just yet, thanks to the powerful momentum currently driving this bull market,” he said.
“Bitcoin reaching six figures is no small feat and goes to show the global adoption of this asset we’ve seen in recent years.
“Despite closing in on that landmark figure, it still feels like we’re reasonably early in this bull market if we look at past market cycles.”
Government makes their move
On Thursday the Australian government released a consultation paper on Australia’s implementation of the OECD‑developed Crypto Asset Reporting Framework (CARF) and associated amendments to the Common Reporting Standard.
Andrew Leigh, Assistant Minister for Competition, Charities and Treasury, said that the new framework is designed to respond to the rapid growth of crypto asset markets globally, and the “challenges this presents for addressing tax evasion and tax avoidance”.
“The new reporting framework will improve visibility over incomes made through crypto assets to increase compliance with local tax laws via automatic exchange of information between revenue authorities. It works by compelling crypto asset intermediaries operating in Australia to report data on crypto related transactions to the Australian Taxation Office,” Leigh said.
This will enable the ATO to share data with global counterparts that have adopted the OECD CARF model, aiming to prevent individuals and entities from concealing their crypto asset income from tax authorities.
“Implementing this reporting framework would maintain Australia’s commitment to international tax transparency,” Leigh said, adding that more than 50 countries have announced their intention of also implementing the framework.
“The effectiveness of international information sharing frameworks depends on their widespread adoption.”
Interested parties can submit responses to this consultation up until 24 January 2025.
