Yesterday, Bitcoin successfully broke through $104,000, setting a new historical record. The market has not yet digested the joy brought by this price, and today Bitcoin started to dip again. BTC's price fell to $90,000 at 6 AM today, with a maximum drop of nearly 10% in one hour. As of the time of writing, BTC's price has rebounded to $98,000.
However, this short-term decline in Bitcoin did not significantly affect the performance of other altcoins, among which SOL rose by 9% after a brief dip, while other altcoins like ETH also rebounded after a slight drop.
After experiencing dramatic rises and falls, can Bitcoin once again return to $100,000 and stabilize this year? Is the long-awaited altcoin season finally around the corner?
Psychological expectation of $100,000; market sentiment needs to be released.
The sharp fluctuations in this market are caused by multiple factors, with the core reason being the release of sentiment.
Why is the core reason attributed to sentiment? After Bitcoin broke the previous bull market's high, $100,000 seemed to become an obsession for crypto investors. This led to most people taking profits once Bitcoin reached $100,000.
After BTC broke the $100,000 mark, long-term Bitcoin holders (LTH) began taking profits. This is a normal phenomenon during Bitcoin bull markets, and profit-taking is still far from reaching extreme levels.
This profit-taking is promoting the current crypto market. For most of the preceding time, Bitcoin moved independently, with other altcoins seeing smaller increases. After this dip, other altcoins quickly rebounded, seeming to validate that the funds from profit-taking in Bitcoin are flowing into other altcoins, which positively supports sector rotation.
Additionally, market sentiment is also influenced by macroeconomic factors. Investor expectations for the upcoming US non-farm employment data have intensified market volatility. Economists generally predict that new jobs in November will see an increase; strong employment data could lead the Federal Reserve to reassess its interest rate cut policy. If the data is strong, the Fed may slow down the pace of rate cuts, which would strengthen the dollar and put some pressure on risk assets, including Bitcoin.
The good news is that altcoins are not following the decline.
Although BTC experienced a spike yesterday, altcoins did not suffer severe declines, and market sentiment remains optimistic, with the greed index reaching 72.
On December 6, OpenAI held its official launch event, releasing the complete version of o1 on the first day. Benefiting from the positive impact of OpenAI's launch event, the AI sector experienced a comprehensive surge. JASMY rose by 45.26% in 24 hours; MASA increased by 28.96% in 24 hours; WLD surged by 25.86% in 24 hours; and RENDER and ANKR also saw increases of 20% in 24 hours.
The NFT sector has also gradually warmed up over the past 7 days, becoming the sector with the largest increase of 30%. The CryptoSlam 500 NFT Composite Index, which measures NFT market performance, has also rebounded about 33% over the past three months.
Additionally, the DeFi sector has also been rising consecutively, with CRV increasing by 60% over the past week, MORPHO rising by about 75% over the past week, and tokens like UNI and AAVE performing exceptionally well. Among public chain tokens, older 'zombie coins' XRP, XLM, and ALGO have seen declines after consecutive increases, while MOVE series token SUI has been rising steadily, breaking through 4 USDT, with a recent increase of 25%.
The altcoin index continues to rise, and market sentiment remains optimistic.
Looking at the indicators for the November altcoin season, comprehensive increases in various indicators have been observed, and the market may have already reached a peak in the short term. Market sentiment remains optimistic, and we are entering a crucial moment.
From the altcoin season indicators, the current value has risen to 88. This indicator is designed to measure the profitability of altcoins relative to Bitcoin. Specifically, it represents how many tokens among the top 50 altcoins have performed better than BTC in the previous quarter (90 days); the larger the value, the more it indicates that it is currently an altcoin season. This value has reached a high point this year, compared to around 30 at the beginning of November.
From the perspective of BTC market share, it reached a peak of 61% on November 21. Historically, when Bitcoin's market cap reaches the 65-70% range, an altcoin season typically follows. This year, after reaching 61%, a comprehensive rally in altcoins has already begun. Subsequently, BTC.D has continued to decline and is currently at 55%.
There are still many favorable factors in the future.
Impact of non-farm employment data: The non-farm employment data to be released tonight will be the focus of the market. If the data is strong, it may trigger a further decline in Bitcoin's price; conversely, if the data is weak, market sentiment may improve, leading to a rebound in Bitcoin. Investors need to closely monitor these economic indicators as they have significant influence on the Federal Reserve's monetary policy.
Changes in the macroeconomic environment: In addition to employment data, changes in the overall macroeconomic environment will also impact Bitcoin's trajectory. The Federal Reserve's monetary policy, interest rate changes, and fluctuations in the global economy may have profound effects on the Bitcoin market. The market generally expects the Fed to cut rates by 25 basis points at this month's meeting; this expectation could stimulate market liquidity and provide support for Bitcoin's price.
Continued support from institutional investors: The interest from institutional investors is still on the rise, with many steadily accumulating Bitcoin to hedge against inflation and economic uncertainty. This ongoing demand will provide support for Bitcoin's price, especially during turbulent market periods.
Investor sentiment and market confidence: Market sentiment and investor confidence will continue to impact the price of Bitcoin. Despite the current market experiencing significant volatility, the speed of the rebound has left many investors optimistic about Bitcoin's long-term prospects. With more institutional investors participating, market confidence is expected to recover, pushing Bitcoin's price upward.
This dip is a release of emotion after achieving the target, and the overall direction remains unchanged. We look forward to the continued rise of the crypto market in 2025, with little resistance ahead.