Bitcoin Breaks Out Above $100,000 and Helps Fuel Broader Market Speculation

Bitcoin broke above the magical $100,000 level on Thursday morning following positive comments from Fed Chair Jerome Powell and the nomination of a crypto-friendly SEC Chair by Donald Trump.

During an interview on Wednesday afternoon, Powell commented, “Bitcoin is just like gold, only it’s digital. It’s not a competitor to the US Dollar… it is for gold.”

Bitcoin has been in a strong uptrend since the election. Still, this comment was sufficient to pop it through the psychologically important $100,000 level, which has stopped it several times since November 21.

This is an important turning point for Bitcoin. It is being embraced by institutional investors and is increasingly viewed as a basic asset class that should be part of a balanced portfolio, just like bonds and precious metals. The shift in character is creating a tremendous amount of FOMO, as many large investors still have little exposure to it.

The Bitcoin speculative surge is spilling over into equities and helping to keep the mood extremely positive as the Nasdaq 100 QQQ and S&P 500 SPY hit new all-time highs. There is some rotational action back and forth between the Magnificent Seven MAGS and the Russell 2000 IWM small-cap index.

While many stocks are becoming technically extended, and there are some concerns about valuations, the strong momentum is running over the skeptics. There is strong dip buying and FOMO, which is helping to keep stocks stuck to the upside.

Bears have been hoping that concerns about an uptick in inflation or worries about economic slowing would trigger profit-taking, but there are no signs of that occurring. The Goldilocks economic scenario is on steroids, and the likelihood of a quarter-point interest rate cut is likely to keep it strong.

Bitcoin is the lead story Thursday, but a key issue is that the positive sentiment is helping to fuel speculative interest in equities, even though they are becoming very extended and need some rest.

Market players will be watching the November jobs news on Friday morning very carefully, although so far there has not been any news flow to derail the strong uptrend.

Equities are mixed early on Thursday while Bitcoin continues to run even higher.

At the time of publication, Rev Shark had no positions in any securities mentioned.