Author: Ben Strack, Blockworks; Translated by: Wuzhu, Golden Finance
As you know, November was an eventful month for cryptocurrencies – fueled by Donald Trump’s election victory.
Bitcoin rose 37.3% last month, according to CoinGlass. That was the asset’s best performance since November 2020 (Bitcoin’s highest average return month, at 46%), when it rose 43%.
Looking ahead, December has not historically been the best month for BTC (average return of +4.9%). In December 2020 (also after the presidential election), the price of Bitcoin rose by 47%; but from 2021 to 2023, the asset has returned -18.9%, -3.6%, and +12.2%, respectively.
Bitcoin has been unable to break through the $100,000 level, which some analysts attribute to profit-taking by investors and resistance caused by put options as traders hedge against a possible decline.
Jeff Embry, managing director of crypto hedge fund Globe 3 Capital, noted that he does not expect specific developments this month to impact crypto markets. Instead, he predicted a “full continuation” of U.S.-stimulated cryptocurrency demand starting in November, “unleashing innovators, risk takers, and investors and saying ‘we’ve got your back now.’”
“Prior to November, the most recent peak for both BTC and ETH was in mid-March,” he explained. “This was an eight-month consolidation period in the bull market, so the market was ready for a catalyst to push to new highs, and the November election provided that catalyst in a huge way.”
Globe 3 Capital’s year-end BTC price prediction (announced in early 2024) is $124,000 — a figure Embry said the firm has been sticking with. Others have pointed to $80,000 as support in the event of a retracement.
“Of course, higher prices depend on higher demand, and we see demand across the board from retail investors, [high net worth individuals], institutions, sovereign wealth funds and governments themselves,” Embry added.
We certainly saw a lot of examples of companies buying Bitcoin in exchange for Treasuries in November. This looks set to continue.
A filing Monday showed that MicroStrategy bought 15,400 bitcoins for about $1.5 billion in cash between Nov. 25 and Dec. 1. Bitcoin miner Marathon Digital revealed (also today) that it intends to issue $700 million in convertible senior notes — the proceeds of which will be used primarily to buy more bitcoin.
MicroStrategy founder Michael Saylor shared a video explaining why Microsoft should hold Bitcoin on its balance sheet. Such a proposal was on the table at the December 10 shareholder meeting; while the board recommended a vote against it (noting that it had considered the issue), it is something to keep an eye on.
Then there is the Federal Reserve’s interest rate decision on December 18. Multiple market odds indicate that the market is expecting a 25 basis point rate cut (67% probability). Rate cuts have historically been positive for risk assets such as Bitcoin.
Finally, the industry continues to await clarity on a possible U.S. strategic reserve of Bitcoin. To Embry’s point that the government is showing interest, U.S. support for this could lead to more countries doing the same.
But analysts at Compass Point Research & Trading give the BITCOIN Act, introduced by Senator Cynthia Lummis (R-Va.), less than a 10 percent chance of becoming law.
“We do not expect the Republican-controlled Congress to appropriate funds for this purpose, as they will focus on expiring tax provisions and the federal budget,” Joe Flynn and Ed Groshans wrote. “The primary challenge this action would encounter is deficit financing of bitcoin purchases.”
They added that while Trump could issue an executive order (perhaps setting up a subaccount in the Treasury’s general fund), a future administration could reverse that action.
What’s the bottom line? As the weather gets colder for many of us, the cryptocurrency story continues to heat up.
