Bitcoin hits another all-time high following Trump’s presidential victory. Is there more to come?

After months of stagnation since spring, Bitcoin (CRYPTO:BTC) came roaring back to life. Riding the momentum of pro-crypto candidate Donald Trump’s presidential election victory, the world’s largest cryptocurrency recently hit new highs, reaching $98,000 on November 21 (at the time of writing). .

Such a sharp rebound naturally raises the question of whether Bitcoin has room to grow or whether a pullback is imminent. But even as Bitcoin approaches the six-figure mark, the data suggests there is more fuel in the tank for the cryptocurrency to maintain its upward trajectory.

Image source: Getty Images.

Leverage: A Key Driver of Bitcoin Market Dynamics

While leverage can amplify returns, it also introduces significant risks both to individual traders and to the overall stability of the Bitcoin market. A highly leveraged market is inherently fragile, with the price of Bitcoin becoming susceptible to sharp swings in either direction.

In contrast, excessive debt is infamous for triggering cascading liquidations, where forced sales drive prices down quickly. Conversely, on the upside, leverage can also push prices higher during surges, creating essentially artificial growth since the recovery is fueled by borrowed funds rather than organic demand.

Periods of excessive debt make Bitcoin particularly unstable. When many traders take highly leveraged positions (especially long positions), the Bitcoin market structure becomes fragile. Even a modest drop in prices can turn into a wave of liquidations, magnifying losses across the entire market. This cyclical instability shows why dramatic and unsustainable price swings often follow conditions of debt distress.

Today’s market is a different story

Fortunately, the current Bitcoin market tells a very different story. Funding rates, the periodic fees exchanged between traders holding long and short positions, are a key indicator for assessing leverage and overall market health. These rates reflect general market sentiment, in which positive rates indicate higher demand for long positions, while negative rates signal bearish sentiment with more short positions. Additionally, the size and amount of funding highlights the extent of leverage in the market.

Today, Bitcoin funding rates are extremely positive, a sign of bullish sentiment. But more importantly, funding rates are significantly lower than previous all-time highs, highlighting a healthier market structure. Data shows that current rates are about half of what they were in March 2024, when Bitcoin soared to $73,000, and about 5 times lower than in November 2021, the height of the previous bull cycle.

This suggests that Bitcoin’s recent rally is not fueled by speculative leverage but rather organic buying. The absence of excessive debt creates a healthier and more stable market, reducing the risk of sudden price collapses triggered by liquidations.

But more importantly, the lack of leverage in the current market provides Bitcoin with a solid foundation for future growth. With spot purchases driving the current rally, Bitcoin is less exposed to the risk of sharp corrections and is favorably positioned for continued growth.

Zoom out: the arguments in favor of Bitcoin in the long term

Although trading Bitcoin around $98,000 undoubtedly carries more risk and offers slightly less upside potential than when it was trading below $60,000 just a few months ago or below 20 000 in 2022, it remains an interesting investment for those with a long-term horizon.

The fundamental reason lies in the design of Bitcoin: it is built to preserve value. Fiat currencies, subject to inflation and central bank policies, often lose purchasing power over time. In contrast, Bitcoin functions as inflation-resistant “digital gold,” with a supply capped at 21 million coins and a transparent, decentralized monetary policy.

Data shows that Bitcoin’s value has consistently increased over a four-year period, a phenomenon linked to its halving cycle, which reduces the rate of new coin creation approximately every four years. While this dynamic is probably a story for another day, the takeaway is that if you’re looking for quick cash, buying here is not recommended. This is not how Bitcoin works. But if you’re looking to save your money and grow it over the long term, then Bitcoin remains a wise investment, even at its high value.

Eventually, the day will come when trading Bitcoin below $100,000 will seem as distant as the days when it traded below $10,000. For now, Bitcoin’s recent rally and stable market structure suggest there is still room for growth.

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