Last week, BTC showed an "M-shaped" top-down trend, and the price fluctuated greatly. Although there have been many surges and plunges, there is still some buying support at low levels. From December 25 to 26, BTC hit $100,000 twice and reached a significant high at $99,963.7. Subsequently, the BTC price fluctuated in the downward channel and stopped falling several times near $91,530.45, forming a long-term key support. The bulls tried to resist, but the overall trend was still accompanied by a large volume during the decline and a shrinking volume during the rebound, indicating that the market is still dominated by shorts. The current price of BTC is $94,540.02 (the above data comes from Binance spot, December 31, 16:30).
Since Trump's election, the inflow of funds into the spot ETH ETF has significantly increased, even surpassing the inflow trend of the BTC spot ETF during the same period. Last week, the spot BTC ETF saw a net outflow of $388 million, while the spot ETH ETF had a net inflow of $349 million. With Trump set to take office in January, ETH may further emerge as 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 dropped to a 15-year low, prompting South Korean investors to exchange won for BTC and USDT at a 3-5% premium through exchanges such as Upbit to avoid exchange rate risks.
As of November, the number of cryptocurrency investors in South Korea has surpassed 15.59 million, accounting for over 30% of the total population. This growth is closely related to Trump's election promise to support the crypto industry, and the rise in BTC prices has further propelled this trend. The total cryptocurrency holdings of South Korean investors reached 102.6 trillion won (approximately $70.8 billion), showing significant growth compared to October.
As interest in cryptocurrencies among South Korean investors increases and exchange rate risks rise, premium trading in the crypto market has become more pronounced, with growing demand for safe-haven assets like BTC and USDT.
The U.S. debt ceiling crisis may trigger downward risk for BTC
On December 30, U.S. Treasury Secretary Yellen warned that the debt ceiling will be reached in mid-January 2025, and global market risk aversion is rising. She stated that the Treasury will take 'extraordinary measures' to cut borrowing after the ceiling is reached, while urging Congress to act quickly to maintain U.S. credit. This news triggered volatility in risk assets, with major U.S. stock indices falling about 1%, and BTC also dropping 4% from intraday highs.
Additionally, the debt issue in the macro context is a core variable. Since the U.S. 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 approval of the spot BTC ETF in the U.S. and more companies incorporating BTC into their asset reserve plans, BTC is becoming a mainstream asset. This year, BTC has risen nearly 130%, approaching the psychological threshold of $100,000. In January, net inflows into ETFs reached $36 billion, with holdings exceeding 1 million BTC.
This trend began with MicroStrategy in 2020 and has attracted more companies to participate. The latest to join is KULR Technology, which produces energy storage products for the aerospace industry, purchasing 217.18 BTC for $21 million and planning to invest up to 90% of excess cash into BTC. Meanwhile, Bitwise has submitted an application for a BTC standard company ETF, which will track the stocks of companies holding over 1,000 BTC. Strive Asset Management has submitted a BTC bond ETF, which provides exposure by holding bonds of companies targeting BTC, further diversifying BTC investment.
With continued institutional participation, the mainstreaming of crypto assets is rapidly developing, and BTC is viewed as a long-term investment tool for hedging inflation and geopolitical risks.
Trump is set to be inaugurated on January 20, with plans to issue at least 25 executive orders
After Trump's successful presidential campaign at the beginning of November, the market experienced a month-long continuous rally. Trump presented himself as crypto-friendly, and many of his nominated department heads are pro-crypto market figures; the historically criticized SEC chairman is also set to step down, leading to a generally optimistic outlook for the future of the crypto market.
According to Coinbase data, the proportion and number of newly elected members of parliament who support crypto have significantly outpaced those of the previous parliament. Michael Rosen, Chief Investment Officer of Angeles Investments, stated, 'Trump's inauguration could bring some surprises to the market, as he is expected to issue at least 25 executive orders on his first day, covering a range of issues from immigration to energy and cryptocurrency policy.'
Market highlights
FTX is about to start the first round of cash debt repayments, and the inflow of compensation funds into the market indirectly reduces selling pressure.
On December 17, FTX and its affiliated debtors announced that the court-approved Chapter 11 reorganization plan will officially take effect on January 3, 2025. The first round of distributions will commence within 60 days after the effective date, limited to approved creditors in Convenience Classes. FTX has reached an agreement with cryptocurrency custodian BitGo and trading platform Kraken to provide asset distribution services for retail and institutional clients.
According to data disclosed by HODL15 Capital, the first round of cash repayments from FTX, which will officially take effect on January 3, includes $16 billion in cash. Previously, some tokens held by FTX/Alameda, such as SOL/WLD, have been mostly sold. Creditors receive compensation in cash rather than tokens, indirectly reducing market selling pressure and increasing the likelihood that some compensation funds will flow back into crypto, thereby boosting market performance.
Tether clarifies rumors of USDT being illegal in Europe
Recently, there have been rumors that USDT will be deemed illegal in Europe on December 30, 2024, raising market concerns. In response, on December 29, Tether CEO Paolo Ardoino took to social media platform X multiple times to clarify this news, calling it 'FUD information' and stating clearly that USDT will not lose its legality on the mentioned date or in the near future.
Under the European Union's Markets in Crypto-Assets Regulation (MiCA), stablecoin issuers must comply with specific regulations, but the regulations provide a transition period of 6 to 18 months, meaning that USDT's legal status is currently not under threat. Furthermore, Tether plans to launch new stablecoins compliant with MiCA standards (such as EURQ and USDQ) to ensure its compliance and continued operation in the European market.
It is worth mentioning that although MiCA requires stablecoin operators to keep over 30% of their liquidity in banks, Tether has expressed reservations about this rule, arguing that 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 presidency has led to a surge in crypto OTC trading volume
Recently, several cryptocurrency trading companies have reported a rapid growth in OTC cryptocurrency volume in recent months, with Trump's election as 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. Prices of mainstream cryptocurrencies like BTC and ETH have risen, prompting projects and investors to manage funds and risks within the new price range. BitGo also pointed out that the election result is the dominant factor behind the recent surge in trading volume, with some companies' trading volumes returning to levels seen during the market peak in 2021.
The United States, the United Kingdom, and the European Union are strengthening tax regulation on cryptocurrencies, and investors need to pay attention to tax rates and compliance requirements.
The United States, the United Kingdom, and the European Union are strengthening tax regulation on cryptocurrencies, affecting investor operations. In the U.S., cryptocurrency transactions are subject to capital gains tax, with rates depending 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 U.K. imposes a capital gains tax of up to 24% on cryptocurrency transactions, with an allowance of £3,000; miners and salary income are subject to income tax and national insurance. Tax rates vary across EU countries, with Germany exempting taxes for holdings over a year, while Spain has a tax rate of 28%. The MiCA regulations in 2025 will unify some rules and enhance tax transparency.
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