In a remarkable display of price action, Bitcoin (BTC) has set a fresh record above $106,000 on Monday, with traders now setting their sights on the $120,000 level as the asset enters the second half of what is historically a seasonally bullish December.

Recent Catalysts Driving Growth

Several factors have contributed to the recent surge in Bitcoin prices. One of the key drivers has been speculation about U.S. President-elect Donald Trump creating a federal bitcoin reserve. Additionally, crypto companies such as Riot Platforms and MicroStrategy have made significant purchases of BTC in past weeks, further fueling the growth.

Optimism in U.S. Policies Boosts Bitcoin ETF Inflows

The optimism surrounding U.S. policies has led to increased inflows into Bitcoin exchange-traded funds (ETFs), contributing to the higher prices. As pointed out by some analysts, this trend is expected to continue as more and more traditional firms adopt digital asset policies due to the immense revenue opportunities and changing political environment.

"TradFi Inflows Now Dominate All Sentiment and Price Action in BTC"

Augustine Fan, head of insights at SOFA, shared his thoughts on the current market conditions in a Telegram message to CoinDesk:

TradFi inflows now dominate all sentiment and price action in BTC unlike any other prior crypto cycle before. This influence will only grow as more and more traditional firms finally need to have a digital asset policy given the immense revenue opportunities and sea-change in the political environment.

Recent Price Action Suggests Sustained Uptrend

A closer look at recent price action reveals that Bitcoin is forming higher lows, indicative of a sustained uptrend. Furthermore, the formation of a bull flag or a bullish continuation pattern after recent highs could signal further upward movement.

Seasonality: A Historically Bullish Period for Bitcoin

December tends to be a historically bullish period for Bitcoin, often referred to as the "Santa Claus Rally." Data from the past eight years shows that Bitcoin ended December in the green six times since 2015, with prices rising by at least 8% and up to 46% (in the outlier year of 2020).

Seasonality: Understanding Its Impact on Assets

Seasonality is the tendency of assets to experience regular and predictable changes that recur every calendar year. While it may appear random, possible reasons for seasonality include profit-taking around tax seasons in April and May, causing drawdowns, as well as the generally bullish November and December, which are signs of increased demand ahead of holiday seasons.

Traders Targeting $120,000 Level and Above

Some traders are now targeting the $120,000 level and above for Bitcoin in the coming year. Jeff Mei, COO at crypto exchange BTSE, shared his thoughts on this topic over Telegram:

We think bitcoin still has tremendous upside potential and could easily hit the $125k mark by the end of 2025. While some say the upside has already been priced in over the last month or so, we think the rally is just getting started.

Why Bitcoin Could Easily Hit the $120,000 Level

Mei’s optimism stems from several factors:

  • Institutional adoption: It takes time for institutions, family offices, and high-net-worth individuals to warm up to the idea of allocating 1%-3% of their portfolios to Bitcoin and crypto as a whole. Once this happens, crypto inflows could skyrocket.
  • Pro-crypto appointments: Trump’s pro-crypto appointments are a positive sign for the industry.
  • Continued rate cuts: Further rate cuts by central banks will continue to boost asset prices.
  • Stimulus spending from China: The Chinese government’s stimulus spending will also contribute to increased demand and higher prices.

Conclusion

The recent surge in Bitcoin prices has set a fresh record above $106,000, with traders now targeting the $120,000 level. Several factors have contributed to this growth, including speculation about a federal bitcoin reserve, increased adoption by crypto companies, optimism surrounding U.S. policies, and seasonality. As more traditional firms adopt digital asset policies, we can expect to see increased inflows into Bitcoin ETFs and higher prices. While there are some who believe the upside has already been priced in, others remain bullish on Bitcoin’s potential to hit the $125k mark by the end of 2025.