Market Review: After 20 months, it returns to $40,000

Since breaking through $30,000 in October, Bitcoin has been fluctuating at a high level. Throughout November, it has remained above $35,000. Even if it falls below the short-term level, it can quickly recover the lost ground. The weekly bottom continues to rise, and finally recorded $37,723 in November, with a monthly increase of 8.9%.

Entering December, Bitcoin continued to gain momentum, breaking through several small resistance levels in succession, and successfully broke through the $40,000 mark at 6 a.m. today, setting a new high in 20 months. From $16,500 at the beginning of the year, Bitcoin's cumulative increase this year has reached 143%.

Early this morning, ETH also successfully broke through $2,200, setting a new high in May 2022. It is currently reported at $2,205, and ETH has increased by 1.9% in the past 24 hours. Unlike Bitcoin's strong performance this year, ETH appears to be relatively sluggish, and the ETH/BTC exchange rate has continued to decline, falling from 0.072 at the beginning of the year to below 0.05, and is currently reported at 0.054, with no major rebound.

Among the top ten tokens by market value today, only ETH’s increase slightly exceeded that of BTC; among the top 50 tokens by market value, TAO (+ 10.4%), RNDR (+ 9%), MATIC (+ 6.7%), SHIB (+ 4.7%), LINK (+ 4.2%), and AVAX (+ 4.3%) performed well, while the growth of the remaining tokens was lower than that of BTC.

Affected by the overall upward market, the total market value of cryptocurrencies has exceeded 1.5 trillion US dollars, up 1.3% in 24 hours; the trading enthusiasm of crypto users has increased significantly, with today's Fear and Greed Index at 74 (last week's average was 70). The degree of greed has increased compared to last week, and the level continues to remain greedy.

In terms of derivatives trading, according to Coinglass data, the entire network had a liquidation of US$120 million in the past 24 hours, of which BTC liquidated US$39.36 million, ETH liquidated US$16.13 million, and other altcoin liquidations accounted for 57%; a total of 52,297 people became victims of the liquidation.

In addition, there has been some improvement in the discount of Grayscale products. The net asset value discount rate of GBTC is currently 8.69%. The discount of GBTC continues to narrow, and the discount level has hit a new low in the past two years, indicating that the market's confidence in Grayscale GBTC's conversion into a spot ETF continues to rise.

The discount rates of the remaining mainstream Grayscale currency trusts are as follows: ETH (-13.40%) and ETC (-33.21%); there are 11 products with positive premiums, namely FIL (+ 721.34%), SOL (+ 301.57%), LINK (+ 223.60%), MANA (+ 184.07%), XLM (+ 160.98%), LPT (+ 116.69%), BAT (+ 61.06%), LTC (+ 38.39%), ZEN (+ 30.68%), BCH (+ 19.79%) and ZEC (+ 3.17%).

Crypto-related listed companies were also affected by the rising market, with their share prices generally rising by more than 10% in the past month. Among them, the share price of Coinbase (NASDAQ: COIN), a US compliant crypto platform, rose by nearly 54.97% in the past month, temporarily reported at $133.76; the share price of MicroStrategy (NASDAQ: MSTR), the largest Bitcoin holding listed company, rose by 14.81% in the past month, temporarily reported at $527.68.

Four reasons support the rise of this market

Odaily Planet Daily has combined information from various sources and sorted out several factors that have influenced this round of market increases:

One is the Fed's expectation of a rate cut next year. Waller, a hawkish Fed governor, said at a recent event that if progress continues to be made in reducing inflation, the Fed may cut interest rates in a few months. This news may be the main reason for the rise in the market in the past week. This is also the first time that a Fed governor has publicly expressed expectations for a rate cut.

The second is the increase in holdings by listed companies. On November 30, MicroStrategy, the largest listed company holding Bitcoin, spent another $593.3 million to purchase 16,130 BTC at an average price of 36,785 USDT. This amount of money may be one of the important forces driving the recent rise in Bitcoin.

Third, incremental funds from the OTC continue to enter the market. Crypto fund company EMC Labs pointed out in its November briefing that the net inflow of stablecoins in November expanded to US$3.5 billion, 3.5 times the net inflow in October. EMC Labs believes that if stablecoins continue to flow in in December, they will be confirmed to enter a bull market. In the most optimistic scenario, the crypto market will enter the early stages of the fifth round of crypto asset bull market as early as January 2024.

Fourth, long-term Bitcoin holders are still holding on to their coins and are reluctant to sell, with less selling pressure. Glassnode's on-chain weekly report released on November 20 showed that as market transactions reached their highs for the year, more than 16.366 million BTC (equivalent to 83.6% of the circulating supply) were in profit, the highest level since November 2021 (near the all-time high). However, the degree of unrealized profits held by investors has not been enough to incentivize long-term holders to sell, thereby keeping the total supply relatively tight.

Future: interest rate cut + halving + spot ETF approval, triple expected positive support

Bitcoin has broken through the $40,000 mark, and its future trend may be affected by the following factors.

One is the expectation of the approval of the Bitcoin spot ETF, and the most critical time node is before January 10 next year. Bloomberg analyst James Seyffart said that the approval window for the spot Bitcoin ETF is expected to be between January 5 and 10, 2024. If the Bitcoin spot ETF is finally approved, it may bring more incremental funds to the crypto market, thereby driving up the price of Bitcoin, referring to the case of the price surge after the approval of the gold spot ETF.

The second is the halving market. The Bitcoin halving will take place on May 9, 2024, and the time is approaching. According to past halving market trends, Bitcoin will rise due to a decrease in the issuance speed and a reduction in the supply side, assuming that demand remains unchanged. In addition, historical data shows that Bitcoin will reach its peak around 368-550 days after the halving, and then bottom out 779-914 days after the halving.

Third, the Federal Reserve is expected to cut interest rates. Currently, major institutions or related data are indicating that the possibility of the Federal Reserve cutting interest rates in 2024 is gradually increasing.

Matrixport said in a recent report that in the first half of next year, some key events may affect the trajectory of Bitcoin, including the SEC's possible approval of a spot Bitcoin ETF, Circle's consideration of listing, and FTX's attempt to restart. These events, coupled with the Bitcoin halving cycle and Ethereum's upgrade in the first quarter of 2024, set an optimistic tone for the market.