Russian Economist: Belief in Crypto Is Driving Bitcoin to New Highs

Bitcoin’s price has soared to a new record high, breaking the $84,000 mark on November 11, 2024, fueled by an overwhelming belief in the potential of cryptocurrencies. Yet, as the digital asset’s popularity rises, a leading Russian economist warns that a price correction may be on the horizon.

Belief in Bitcoin Drives Its Meteoric Rise

Bitcoin advocates are riding high on a wave of optimism. The latest surge, sending Bitcoin’s price past $84,000, has been attributed to a variety of factors—chief among them a widespread belief that cryptocurrencies hold the key to the future.

Russian economist Andrey Stolyarov, an Associate Professor and Deputy Head of the Financial Market Infrastructure Faculty at the National Research University Higher School of Economics (HSE), explained that the crypto market is currently in a strong bull market. According to Stolyarov, both technical and fundamental factors are contributing to the bullish momentum.

He described the current crypto boom as a product of “optimism in the market,” but was cautious about its sustainability. “Expectations of a further rate cut [from the Federal Reserve] and greater liquidity are giving the bulls momentum. But the market believes in a bright future,” he said. However, he emphasized that Bitcoin’s rally would likely not last indefinitely.

Stolyarov’s comments came after the digital asset’s impressive performance, which has left many investors bullish. While not fully convinced by the term “golden age,” he acknowledged that the current climate does resemble a period of heightened optimism for cryptocurrencies.

Trump’s Win Adds Fuel to the Fire

One key factor in the rising belief in Bitcoin is the unexpected consequences of Donald Trump’s victory in the 2024 U.S. presidential election. Richard Tan, the CEO of Binance, famously described this win as ushering in a “golden age” for cryptocurrencies. Trump’s history of pro-business policies, including his stance on Bitcoin, has given investors fresh hope for the future.

Stolyarov agreed that Trump’s victory has indeed ignited a new bull market, especially as crypto investors are anticipating favorable policies for the industry. “The market is definitely riding the wave of the pro-crypto sentiment coming from Trump’s policies,” said Stolyarov. However, he also cautioned that such optimism could quickly turn on itself. “There will definitely be a decline at some point,” he warned. When exactly that happens, though, is anyone’s guess.

At present, the market is enjoying a period of high liquidity, fueled in part by the expectation of a further rate cut by the U.S. Federal Reserve. This has given crypto investors more purchasing power, which has contributed to Bitcoin’s rising price.

Bitcoin’s Record-Breaking Streak: A Complex Mix of Factors

While Trump’s victory undoubtedly gave the crypto market a boost, some experts point to additional elements fueling the rise. Sumit Gupta, co-founder of the Indian crypto exchange CoinDCX, believes that Bitcoin’s climb is more than just an outcome of U.S. politics. He attributed the surge to a combination of institutional support and favorable macroeconomic conditions.

Gupta highlighted MicroStrategy’s announcement to invest up to $42 billion in Bitcoin over the next three years. This massive commitment by the business intelligence firm signals growing confidence in Bitcoin, with the firm purchasing over $2 billion worth of Bitcoin in a recent deal.

“This move is a strong vote of confidence from institutional investors,” said Gupta. He added that the decision to buy Bitcoin at this scale underscores its growing status as a safe haven and store of value. This commitment, Gupta argued, has been crucial in shaping Bitcoin’s bullish narrative.

As crypto advocates ride high on these developments, it’s clear that more players, both institutional and individual, are seeing Bitcoin as an asset worth investing in. The ongoing influx of capital into the crypto market is just one example of the increased demand for digital assets.

Macroeconomic Conditions Also Supporting Bitcoin’s Rally

While institutional moves like MicroStrategy’s investment have certainly played a part in Bitcoin’s surge, broader economic trends are also aligning in Bitcoin’s favor. The overall macroeconomic environment, with inflation concerns and low-interest rates, is making alternative assets like Bitcoin more attractive.

In addition to institutional support, the ongoing economic uncertainty has led investors to seek refuge in Bitcoin, which is seen as a hedge against traditional financial systems. This shift in sentiment, along with the overall bullish environment, has made Bitcoin an even more desirable asset.

Still, experts are divided on how long the optimism surrounding Bitcoin will last. Will it be able to sustain its current momentum in the face of potential macroeconomic shifts? Or will the crypto market face a correction when investors begin to reassess their positions?

As Stolyarov suggested, the current bull market may not last forever, and investors should be prepared for a drop once the bullish sentiment fades. “For now, the market is riding high,” he said, “but we’ll have to see if it can continue.”