Summary Bitcoin's bullish outlook is supported by Trump's election and increasing institutional and corporate adoption, indicating a sustained long-term uptrend beyond cyclical patterns. Despite a 90% YTD rise, Bitcoin remains below its inflation-adjusted all-time high, with recent progress and future catalysts yet to be fully priced in. Trump’s pro-crypto stance, including potential regulatory reforms and initiatives like a US Sovereign Bitcoin Reserve, could significantly boost Bitcoin's adoption and price. Risks include regulatory uncertainty and the challenge of achieving bipartisan support for pro-crypto legislation, which could impact Bitcoin's adoption and price trajectory. Investment Thesis It is becoming increasingly difficult not be bullish on Bitcoin ( BTC ) as the stars are starting to align: Trump’s election and the institutional and corporate adoption trends hint to a sustained bullish move for BTC over a longer period of time, beyond charts and BTC cyclical pattern. Bitcoin Price YTD (GuruFocus) While Bitcoin is already up over 90% YTD and considerably outperformed both the S&P 500 and the tech-heavy Nasdaq, I do believe that the integral part of the performance until now was a catch-up move to recover from the bear market. From an inflation-adjusted basis , Bitcoin just passed its 2021 all-time high and both the progress achieved recently and the near future catalysts still have to be priced in. Bitcoin Price YTD (GuruFocus) Bitcoin Price 3Y (GuruFocus) Trump Election While Kamala Harris was not a critic of the crypto sphere, Donald J. Trump was perceived as a much stronger backer of favorable crypto legislation. There is a double reason to that: the Democratic party and Trump himself. Indeed, the Democratic party is overall perceived as more negative with regards to crypto because the most vocal anti-crypto public figures stem from that party, in particular Elizabeth Warren (US Senator) and Gary Gensler (SEC Chair). Elizabeth Warren called Bitcoin “ a plaything for terrorists and money launderers ". Gary Gensler in his role of SEC Chair famously said about crypto “ it’s unlikely this stuff is going to be a currency .” The SEC sued Ripple in 2020 (before Gensler took office) claiming the company illegally raised money by selling a token (XRP) without registering it as a security. Since Gensler became SEC Chair, the number of lawsuits and fines rapidly multiplied leaving crypto market participants a sentiment of being somewhat persecuted: under Gensler’s SEC, the crypto industry received more than 100 enforcement actions through 2023 and spent over $400 mn defending itself against Gensler . Gensler’s SEC has been marked by a strong preference for enforcement over legal clarification. And that’s where Trump comes into play: he emerged as the most crypto-friendly candidate, as shows the 9% intraday surge of BTC reaching a new all-time high at $76,000 on the day of his election. He had announced at the Bitcoin Conference 2024 that he would “ fire Gary Gensler on Day 1 ”. While legally he cannot fire Gensler, just like he cannot fire Powell, the former did remain silent and it is broadly assumed that Gensler will leave office (unlike Powell who already confirmed that he is not leaving). Trump has several other arguments that could cause Bitcoin to continue rallying as new details are disclosed and announcements are made. The first one is that has skin in the game: he owns a crypto firm, World Liberty Financial. This project of governance platform is new and the launch has not been particularly successful. And per se that doesn’t matter: it’s the fact that he is open to cryptos to the point of launching his own crypto firm. In addition, his connections to the crypto world make it likely that he will appoint pro-crypto advisors and people in key positions. Charles Hoskinson, the founder of Cardano, already announced that his firm will act as a crypto advisor for a Trump administration . Last but not least, Trump also announced the goal to create a US Sovereign Bitcoin Reserve where all confiscated Bitcoins would be held, and promised to make the US the “capital of crypto”. Adoption Trends The adoption trends show encouraging signs that more people invest more into Bitcoin. Indeed, November 7 was the single best day of BTC ETF inflows since the launch of those ETFs. ETF Inflows (CoinGlass) BlackRock’s spot Bitcoin ETF ( IBIT ) alone registered $1.1 bn of net inflows, roughly 82% of the total $1.34 bn ETF inflows. There is also a noticeable uptrend in ETF inflows since June. On top of the ETF inflows, which are primarily indicative of institutional investors adoption, there is another metric that shows bullish signs: the corporate adoption trends. Indeed, as of today 29 different publicly companies own Bitcoin . All together, they own close to 2% of the BTC supply and the top holder is MicroStrategy Inc. ( MSTR ) which stock is up approximately 400% YTD, showing the markets appreciate the BTC accumulation strategy of the company co-founded by Michael Saylor. Corporate Holdings of BTC (CoinGecko) The list quite logically includes primarily crypto miners and crypto exchanges, but companies like MicroStrategy, Tesla Inc. (TSLA), and Block Inc. ( SQ ) are non-crypto firms holding BTC. And they have all outperformed the major US indexes on a 1-year basis, which shows that the markets likely value positively the holdings of BTC by listed companies, especially in a BTC uptrend phase. Risks As for every investment, there are risks. The high reward profile of the asset since inception compensates for the risks, although those have to be taken into account. The main risk to adoption uptrend is continued regulatory lack of clarity: a simple “no” of Gary Gensler not leaving the SEC Chair role could significantly impact BTC price but also adoption trends. If the SEC, whether chaired by Gary Gensler or someone else, does not manage to work on a comprehensive approach of clarity above enforcement, potential new BTC adopters, especially institutional and corporate, may prefer to remain on the sidelines. Additionally, President-elect Trump may surround himself with pro-crypto advisors and legal counsels to draft new regulatory propositions. However these pieces of legislation need to pass both Houses (House of Representatives and Senate). And it could be particularly intricate to achieve a bipartisan agreement on a clear and positively worded framework on a topic still as controversial as crypto. Bottom Line Beyond technical analysis based on charts that are often based on past patterns, Bitcoin’s continued outperformance may start to be disconnected from past cycles. Indeed, this is the first time the US have a pro-crypto President (Trump during his first mandate was still a crypto skeptic) willing to reach out to the crypto community to draft a new regulatory environment that would be more positive for crypto participants. A clearer legal framework could further boost adoption trends, particularly ETF inflows and corporate adoption. Ultimately, Bitcoin could be poised for a more solid, longer term uptrend beyond charts.
