Summary I recommend buying Bitcoin due to the favorable regulatory environment and the recent price drop, presenting a great entry point for investors. Bitcoin ETFs are rapidly growing, suggesting increased institutional interest, which could drive prices higher if they increase their positions. The current political landscape is pro-crypto, with many lawmakers supporting the industry, enhancing Bitcoin's long-term prospects. Despite potential risks, the improved outlook and institutional inflows make Bitcoin a compelling investment opportunity at current levels. Investment Thesis I recommend buying Bitcoin ( BTC-USD ). We recently saw the biggest drop in Bitcoin prices since Trump won the US election. Many traders are wondering if this is the top, since the $100,000 target was not reached. In my view, this is a great entry point. The regulatory environment for cryptocurrencies is much more favorable with the current composition of the presidency, senate, and house, but there are two other facts that make me even more confident. Bitcoin ETFs already exceed $104 billion in assets and are expected to surpass gold soon, which seems to suggest an influx of institutional investors. However, these investors still have little exposure to bitcoin, what will happen if they buy more? Biggest Drop Since Trump's Election After a strong momentum, Bitcoin was very close to hitting the $100,000 mark, however, what investors saw was a sharp decline in its prices to the $91,000 region. This was the biggest drop since Trump's election. Bitcoin Prices (Seeking Alpha) Many traders are skeptical as the psychological barrier of $100,000 has not been reached, which could indicate a top. But I will show you solid arguments that show this is an excellent entry point. Crypto-Friendly Politicians One fact that really caught my attention was that the cryptocurrency industry was responsible for almost half of the corporate contributions to the election, and apparently this brought many politicians who are followers of the industry. Around 300 pro-crypto lawmakers (including Democrats ) will occupy seats in the Senate and House, in addition to the president himself, who has already made public his ambitions to make America the world capital of cryptocurrencies. This corroborates a positive view of Bitcoin. The Investment Flow Into Crypto ETFs Is Absurd Gold is considered one of the world's great stores of value, and its ETFs are the largest in terms of revenue. However, Bitcoin ETFs are growing at such a fast pace that they are already approaching gold. Bitcoin ETFs vs Gold ETFs (Bitcoin Archive) The table below also shows data that of the 575 ETFs launched this year, 14 of the top 30 were funds related to Ethereum or Bitcoin. It is noteworthy that the top four positions were related to Bitcoin ETFs. Flow (Decrypt) Given the nature of a Bitcoin ETF, and the fact that individual investors can invest in Bitcoin directly through an exchange, this flow makes me think that much of the recent price increase is related to institutional investors, let's see. Institutional Investors Buying Bitcoin? It is interesting to note how the launch of ETFs has increased institutional investors' appetite for bitcoin. However, data indicates that the long positions of these market participants are still very small. A recent survey of asset managers who together manage $1.7 trillion in assets worldwide answered some very pertinent questions. 80% of them said they feel more confident and that they will increase their positions in digital assets in the coming year. Another survey , conducted with 250 investment institutions, indicates an even more interesting fact. Only 35% of respondents note that they allocate between 1% and 5% of their assets to digital assets. Finally, a survey by OKX revealed that 69% of institutional investors plan to increase their position in cryptocurrencies and that, by 2027, digital assets would represent 7.2% of the portfolio on average. I wonder, what happens if institutional investors buy these assets en masse? Possibly, the $100,000 target for Bitcoin is too conservative, which corroborates my buy recommendation. How Far Can Bitcoin Go? I recently published an article about the Franklin Bitcoin ETF ( EZBC ), in which I seek to provide a pricing of Bitcoin based on seasonality, and at the end of November, seasonality proved to be very useful. Bitcoin Price Seasonality (Topdown Charts) Now, considering that prices tend to slow down in the first quarter, it is not difficult to imagine that Bitcoin could reach a region between $110,000 and $115,000 by the end of the first quarter of 2025. Potential Threats To The Bullish Thesis It is interesting to note that not only are Bitcoin prices at an all-time high, but also their percentage, compared to the global equity market. Let's see below. Bitcoin's market cap as a % of the world stock market (Bespoke) As we can see in the chart, the price variations are very strong, and we are in a price zone where the margin of safety has decreased a lot. For a conservative investor, investing in cryptocurrencies is not recommended. Another risk is that, as in this article, Bitcoin is often compared to gold. However, it is important to note that Bitcoin lacks intrinsic value , and its scarcity has been questioned by some experts. The thesis is complex, and investors should exercise caution when investing. The Bottom Line Something that has not been seen for some time has happened: after Trump's election, Bitcoin finally experienced a significant drop. What is a cause for concern for some may be seen as an opportunity for others. This is because the current political environment for cryptocurrencies is much more favorable than it was 4 years ago. Additionally, the inflow into Bitcoins apparently driven by institutional investors may be just beginning. Based on this analysis, I recommend buying Bitcoin. In my view, investors should view the recent drop as an opportunity given the improved regulatory environment and more positive outlook.
