Last week, BTC showed an 'M-shaped' top reversal trend, with significant price fluctuations. Although there were multiple instances of sharp price rises and falls, there was still some buying support at lower levels. From December 25 to 26, BTC briefly peaked at $100,000 twice, with a notable high at $99,963.7. Subsequently, BTC's price fluctuated within a downward channel, repeatedly finding support near $91,530.45. Bulls attempted to resist, but the overall trend remained downward with increasing volume, and volume decreased during rebounds, indicating that the market is still dominated by bears. The current price of BTC is $94,540.02 (data sourced from Binance spot at 16:30 on December 31).
Since Trump's election, the inflow of funds into spot ETH ETFs has significantly increased, with the growth trend even surpassing that of spot BTC ETFs. Last week, the net outflow of the spot BTC ETF was $388 million, while the net inflow of the spot ETH ETF was $349 million. With Trump's inauguration in January, it may further propel ETH to become the best-performing mainstream token in the next quarter.
Market Interpretation
The number of cryptocurrency investors in South Korea has surged, with the depreciation of the won driving premium trading.
On December 28, CryptoQuant CEO Ki Young Ju pointed out that the won exchange rate has fallen to a 15-year low, prompting South Korean investors to exchange won for BTC and USDT at a 3-5% premium through exchanges like Upbit to avoid exchange rate risks.
As of November, the number of cryptocurrency investors in South Korea exceeded 15.59 million, accounting for over 30% of the total population. This growth is closely related to President Trump's election promise to support the cryptocurrency industry, while the rise in BTC prices further propelled this trend. The total cryptocurrency holdings of South Korean investors reached 102.6 trillion won (approximately $70.8 billion), a significant increase from October.
As South Korean investors' interest in cryptocurrencies increases and exchange rate risks rise, the premium trading in the crypto market has become increasingly significant, with rising demand for safe-haven assets like BTC and USDT.
The US debt ceiling crisis may trigger downward risks for BTC.
On December 30, US Treasury Secretary Yellen warned that the debt ceiling would be reached in mid-January 2025, with global market risk aversion increasing. She stated that the Treasury would take 'extraordinary measures' to reduce borrowing after reaching the ceiling but urged Congress to act quickly to maintain US credit. This news triggered volatility in risk assets, with major US stock indices dropping about 1%, while BTC also fell 4% from its intraday high.
Additionally, the debt issue in the macro context is also a core variable. Since the US established the debt ceiling in 1939, its total national debt has exceeded $36.2 trillion. In the current environment of global macroeconomic turmoil and political uncertainty, the BTC market may face greater pressure.
In 2024, institutional BTC adoption is accelerating, with KULR Technology purchasing 217.18 BTC for $21 million.
Since the US approved the spot BTC ETF, more companies have been incorporating BTC into their asset reserve plans, and BTC is becoming a mainstream asset. This year, BTC has risen nearly 130%, approaching the psychological level of $100,000. In January, the net inflow of ETFs reached $36 billion, with holdings exceeding 1 million BTC.
This trend began with MicroStrategy in 2020 and attracted more companies to participate. The latest to join is KULR Technology, which produces energy storage products for the aerospace industry. The company purchased 217.18 BTC for $21 million and plans to invest up to 90% of its surplus cash in BTC. Meanwhile, Bitwise has submitted an application for a BTC Standard Company ETF that will track stocks of companies holding over 1,000 BTC. Additionally, the BTC Bond ETF submitted by Strive Asset Management provides exposure by holding corporate bonds targeted at BTC, further promoting the diversification of BTC investments.
With continued institutional participation, the mainstreaming of crypto assets is rapidly developing, and BTC is seen as a long-term investment tool for hedging against inflation and geopolitical risks.
Trump will be inaugurated as president on January 20, and is expected to issue at least 25 executive orders.
After Trump's successful presidential campaign in early November, the market experienced a month-long rally. Trump showcased a pro-crypto stance, and many of his nominated department heads are also supportive of the crypto market. The historically criticized SEC chairman is also about to step down, which has led to a generally optimistic view of the future of the crypto market.
According to Coinbase data, the newly elected members of Congress show a significantly higher proportion and number of supporters for cryptocurrencies compared to the previous session. Michael Rosen, Chief Investment Officer of Angeles Investments, stated: "Trump's inauguration may also bring some surprises to the market, as he is expected to issue at least 25 executive orders on a range of issues from immigration to energy and cryptocurrency policies on his first day in office."
Market Highlights
FTX is about to begin the first round of cash debt repayments, which will indirectly reduce selling pressure in the market.
On December 17, FTX and its affiliated debtors announced that the court-approved Chapter 11 reorganization plan would officially take effect on January 3, 2025. The first round of distributions will be initiated within 60 days after the effective date, only for approved creditors in the Convenience Classes. FTX has reached agreements with cryptocurrency custodians BitGo and trading platform Kraken to provide asset distribution services for retail and institutional clients.
According to data disclosed by HODL15 Capital, FTX's first round of cash repayment distribution, effective January 3, includes $16 billion in cash. Previously, some tokens held by FTX/Alameda, such as SOL/WLD, have been largely sold off. Creditors will receive compensation in cash rather than tokens, which indirectly reduces market selling pressure and increases the likelihood of some of the compensation funds flowing back into crypto, thereby boosting market sentiment.
Tether clarifies rumors of USDT being illegal in Europe.
Recently, rumors have circulated that USDT will be deemed illegal in Europe on December 30, 2024, raising market concerns. In response, Tether CEO Paolo Ardoino has repeatedly addressed this on social media platform X, clarifying that this information is 'FUD' and explicitly stating that USDT will not lose its legality on the aforementioned date or in the near future.
According to the EU's Markets in Crypto-Assets Regulation (MiCA), stablecoin issuers must comply with specific regulations; however, the regulation provides a transition period of 6 to 18 months, meaning the legal status of USDT is currently not threatened. Additionally, Tether plans to launch new stablecoins (such as EURQ and USDQ) that comply with MiCA standards to ensure its compliance and continued operation in the European market.
It is worth mentioning that although MiCA requires stablecoin operators to deposit over 30% of their liquidity in banks, Tether has expressed reservations about this rule, believing it could adversely affect the liquidity management of stablecoins. However, as of now, Tether has not encountered any financial issues or illegal activities, and its market position remains stable.
Trump's inauguration as President of the United States has driven a surge in OTC cryptocurrency trading volume.
Recently, multiple cryptocurrency trading companies reported that OTC cryptocurrency volume has surged in recent months, with Trump's election being a key driving force. Tim Ogilvie from Kraken Exchange stated that OTC trading volume has increased by 220% year-on-year. Traders noted that market participants are actively preparing and initiating trades as the election approaches. The prices of mainstream cryptocurrencies like BTC and ETH have risen, prompting projects and investors to manage funds and risks in the new price range. BitGo also pointed out that the election results are the dominant factor behind the recent surge in trading volumes, with some companies' trading volumes having rebounded to levels seen during the 2021 market peak.
The US, UK, and EU are strengthening tax regulations on cryptocurrencies, and investors need to pay attention to tax rates and compliance requirements.
The US, UK, and EU are strengthening tax regulations on cryptocurrencies, affecting investor operations. In the US, cryptocurrency transactions are subject to capital gains tax, with rates based on holding time and income; miners and staking income are subject to income tax, and exchanges will need to report data starting in 2025. The UK imposes a maximum capital gains tax of 24% on crypto asset transactions, with an exemption threshold of £3,000; miners and salary income are also subject to income tax and national insurance contributions. EU countries have varying tax rates; Germany has no tax on holdings over one year, while Spain's rate is up to 28%. The MiCA regulations will unify some rules in 2025, enhancing tax transparency.
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