(Kitco News) – Volatility returned to financial markets on Wednesday after the latest Consumer Price Index (CPI) report fell in line with expectations but showed that inflation remains ‘sticky,’ slightly dampening the expectations for a total of 100 basis points worth of interest rate cuts in 2025.
That said, the CME FedWatch tool shows that Wall Street remains confident that a 25 bps cut will come at the FOMC meeting in December, putting the odds at 82%.
After starting slow but climbing into the green following the CPI report, stocks faced pressure in the afternoon, leading to a mixed close for the major indices.
At the closing bell, the Dow finished in the green, up 0.11%, the Nasdaq lost 0.26%, and the S&P was flat.
Spot gold also struggled as traders focused on risk assets, with the yellow metal losing 0.98% on the session to trade at $2,572.30 at the time of writing.
Bitcoin (BTC) “took us on a wild ride, briefly touching $90,100 yesterday before dipping down to $86,300 earlier today,” noted analysts at Secure Digital Markets. “The alts got hit even harder, especially those meme coins. BTC didn't just bounce back—it smashed through to a new all-time high of $93,500.”
BTC/USD Chart by TradingView
“It has now edged past Saudi Aramco, landing as the 7th largest asset worldwide,” the analysts highlighted. “The order books are heating up with action too—looks like offers are lining up between $93,000 and $95,000.”
“BTC’s chart is looking bullish, gunning for that magical $100,000 mark,” they added. “But don’t forget, the U.S. dollar's still flexing strong, which could mean tighter financial conditions that might slow our ascent a bit.”
The other big story in crypto was Donald Trump’s announcement regarding the Department of Government Efficiency (D.O.G.E.), which will be spearheaded by Elon Musk and Vivek Ramaswamy. Rumors about D.O.G.E helped kick off a rally for Dogecoin (DOGE), and the announcement helped the top memecoin spike to $0.44 on Tuesday and retest that resistance level on Wednesday.
DOGE/USD Chart by TradingView
While the Dogecoin rally looks to have entered into a consolidation phase for the time being, most analysts agree that this bull cycle is just getting warmed up, and it’s widely expected that both BTC and DOGE will see further gains in the weeks and months ahead.
At the time of writing, Bitcoin trades at $89,430, an increase of 1.88% on the 24-hour chart. Dogecoin, meanwhile, trades at $0.388 for a gain of 3.5%.
Still early for Bitcoin, $500k is possible
“It’s no longer the first inning. But until Bitcoin hits $500K, it’s still early,” Bitwise Chief Investment Officer Matt Hougan wrote in a note to clients on Tuesday.
“As I write this memo on Tuesday morning, Bitcoin has just set a new series of all-time highs over the past 24 hours and is currently trading around $88,000,” he noted. “It’s now up roughly 100% year-to-date, and more than 25% since the historic election on November 5.”
Hougan said that while a pullback into consolidation is expected, “$100,000 feels like it could be right around the corner.”
“Moments like these spark waves of emotion,” he said. “Those who owned Bitcoin prior to the November election are jubilant, and rightly so. But many of those who didn’t feel as though they’ve missed the boat. For this latter group, I have a message: You’re still early. In fact, you’ll be ‘early’ until Bitcoin crosses $500K.”
Before expanding his outlook, Hougan gave the normal disclaimer, saying, “There is no guarantee that Bitcoin will ever be worth $500K per coin. We don’t even know if it will eclipse $100,000! Bitcoin is volatile, its outlook is uncertain, and it could pull back at any time.”
“But in my view, $500K per coin is the correct demarcation between early and late, for a very simple reason: It marks the point where Bitcoin would be ‘mature,’” he said. “As I discussed a few weeks ago, an investment in Bitcoin is really two investments in one.”
“When you bet on Bitcoin, you’re making a bet that: Demand for store-of-value assets like Bitcoin and gold will increase as governments take on debt and debase their currencies; and Bitcoin will increasingly be accepted as a store of value, standing shoulder to shoulder with gold,” he said.
“The second bet is just another way of saying that it’s still early for Bitcoin,” Hougan reiterated. “That bet is very much still ‘on.’”
To support this bullish outlook, he cited the world’s oldest store of value.
“A mature store-of-value asset looks like gold. No one bats an eye when institutions allocate to gold or when central banks invest billions from their balance sheets,” he underscored. “You don’t read a ton of skeptical media stories about gold or see sitting U.S. senators building anti-gold armies. Gold has ‘made it.’”
Hougan said this is still not the case for Bitcoin. “Bitcoin is still developing, even after this latest rally. It’s still considered news when pensions and endowments make a small investment in crypto. The Department of Labor still warns 401(k) providers not to put Bitcoin in their portfolios, citing the need for ‘extreme care.’ And there is still excitement when big hedge fund investors reveal a positive view of crypto.”
“The market has come a long way with the massive success of Bitcoin ETPs and the rise of pro-crypto policymakers,” he noted. “But until Bitcoin is as boring as gold—widely held by central banks and institutions alike—it’s by definition still early.”
As for how he reached a price point of $500,000 as the marker for Bitcoin ‘making it,’ Hougan again referenced gold.
“Today, gold is an $18 trillion market, and Bitcoin is roughly $2 trillion. That puts the store of value market at roughly $20 trillion,” he explained. “A mature Bitcoin would, at a minimum, share this market equally with gold. Roughly 20 million Bitcoins exist today—the remaining million will be issued over the next century—so Bitcoin would hold half the market when it hits $500K. Until then, it’s still early.”
As for what it will take to push King Crypto to a price of $500,00 per coin, Hougan pointed to adoption by central banks.
“Among other things, we’ll likely need the same groups that broadly allocate to gold today to also allocate to Bitcoin,” he said. “The biggest missing piece in that equation is central banks.”
“Today, governments hold roughly 20% of the world’s gold reserves, compared to less than 2% of the world’s Bitcoin,” he highlighted. “For Bitcoin to approach the half-million-dollar level, we would need to see that gap narrow. That’s a tall order, but we have seen some progress. Perhaps the biggest example here is the plan from Senator Cynthia Lummis (R-WY) for the U.S. to adopt a national Bitcoin reserve, with a goal of buying more than $80 billion worth of Bitcoin using government funds.”
“If we start to see that happen, $500K Bitcoin is fully within view,” Hougan said. “But ultimately, I think we will go higher. My $500K target is based on Bitcoin eating into gold’s market share when, in reality, I think it will actually grow the overall market. It also assumes that the total store-of-value market is static, when I think it will grow rapidly as governments continue to pile on debt and print money.”
“Could we see $1 million bitcoin? Higher? Absolutely,” he concluded. “But $500K feels like a good start.”
Altcoin profit-taking continues amid meme coin rally
On the whole, altcoins experienced a down day, with most tokens in the top 200 recording losses. Meme coins were the bright spot in trading on Wednesday.
Daily cryptocurrency market performance. Source: Coin360
Peanut the Squirrel (PNUT) was the top gainer, increasing 221%, followed by gains of 34.4% and 27.9% for Pepe (PEPE) and dogwifhat (WIF), respectively. Leading the losers was Mantra (OM), which fell 14.3%, followed by declines of 14.2% and 12.9% for Goatseus Maximus (GOAT) and EigenLayer (EIGEN), respectively.
The overall cryptocurrency market cap now stands at $2.94 trillion, and Bitcoin’s dominance rate is 59.9%.
