With the Federal Reserve about to announce a 25 basis point rate cut, market expectations for liquidity easing are unprecedentedly high. Bitcoin, as the leader of the cryptocurrency market, broke the deadlock first, with prices surpassing $107,700, setting a new historical high. This momentum not only reflects the market's optimistic sentiment about the rate cut but is also positively influenced by institutional and corporate accumulation.
BTC surged nearly $2,000 within an hour after opening this week, drawing global investors' attention. Notably, business intelligence company MicroStrategy recently increased its Bitcoin holdings by $1.5 billion, bringing its total to 439,000 coins, valued at up to $4.638 billion. Meanwhile, MicroStrategy's inclusion in the NASDAQ 100 index has further fueled market expectations for continued institutional inflows.
Inclusion in the index may trigger passive inflows into MicroStrategy's stock, thus creating conditions for it to purchase more BTC. This 'funding cycle' not only drives up MicroStrategy's stock price but also indirectly supports the spot price of Bitcoin.
BTC short-term breakout pressure and volatility risks.
After breaking through $107,700, Bitcoin's market momentum remains strong, but short-term volatility risks cannot be ignored. Above $104,000 has triggered over $600 million in short positions to be closed, and market momentum is building. However, short liquidity demand is gradually converging in the $108,000 to $111,000 area, and this price level is expected to become a short-term focus.
Bitcoin's price around $150,000 may face a period of consolidation pressure. This is similar to the situation earlier this year when large sell orders suppressed prices, and accumulated orders may slow upward momentum.
Ethereum continues to follow strongly, breaking through the $4,000 mark.
As Bitcoin surged, Ethereum also showed strength. Data shows that the ETH price once climbed to $4,081, refreshing its highest point since December 2021, with the current price maintaining around $4,029, a daily increase of over 3%. Although it has not yet reached the historical high of $4,878 set in November 2021, its performance has far exceeded market expectations, demonstrating strong upward momentum.
The continuous inflow of institutional funds has become an important support for ETH's rise. Ethereum funds have recorded net inflows for seven consecutive weeks, totaling $1 billion. In the past two weeks, the inflow of ETH-related ETFs has exceeded $800 million per week, reflecting strong optimism in the market about Ethereum's future potential.
The altcoin market is brewing a strong rebound.
Currently, Bitcoin's dominance has risen to 58%, and market funds remain highly concentrated in BTC. However, this situation may change once BTC stabilizes. Once Bitcoin prices break through $120K to $130K and profit-taking occurs, some funds are expected to shift towards the altcoin market.
This logic is similar to when BTC broke through $40K in 2020. At that time, BTC prices adjusted, and funds flowed into the altcoin market, leading to a strong 'altcoin season.'
ETH, as the largest altcoin by market cap, has shown strong follow-up signs first. Other altcoins like XRP, Polkadot, and Litecoin funds have also continued to record net inflows, demonstrating institutional investors' broad layout and confidence in the overall market.
Has the Christmas rally ignited early? Market sentiment is high.
With the year-end holidays approaching, the traditional market's 'Christmas rally' often drives the stock and cryptocurrency markets up. Data shows that since 2015, Bitcoin has recorded significant gains in December six times, with the highest increase reaching 46%. This year's rally seems to have started early.
MicroStrategy's inclusion in the NASDAQ 100 index creates a virtuous cycle, coupled with the strong market sentiment before the holiday, which may drive BTC spot prices further up. As ETH continues to grow, the altcoin market is also welcoming a potential explosion window.
Meanwhile, favorable factors such as the Trump administration's pro-cryptocurrency stance, potential rate cuts from the Federal Reserve, and global inflation easing further solidify the growth foundation of the cryptocurrency market. The next target price for Bitcoin is $110,000 to $120,000, and the altcoin rebound may follow.
Institutional investment and ETF inflows create new highs.
Global cryptocurrency funds are continuously favored by institutional investors, with inflows reaching a historic high. In the past four weeks, net inflows into cryptocurrency funds totaled $3.2 billion, with annual cumulative inflows reaching $44.5 billion, more than four times that of any previous year.
Among them, Bitcoin ETFs listed in the U.S. have performed particularly well, attracting $2.17 billion in net inflows in the past week, and cumulative inflows have exceeded $5.3 billion since their launch at the beginning of the year. Meanwhile, the inflow of Ethereum ETFs is also showing an accelerating trend, demonstrating broad institutional recognition of the ETH market.
As Bitcoin breaks through $107,700 to set a new historical high, market expectations for further price increases of BTC continue to rise. In the short term, liquidity focus may center around the $108,000 to $111,000 range, while the longer-term target price has aimed at $150,000.
At the same time, ETH's strong momentum indicates that the altcoin market is brewing a new rebound. Once BTC's dominance begins to decline, the effect of capital rotation towards altcoins will become apparent, driving an overall surge in market momentum.
Overall, under the multiple favorable conditions of the Federal Reserve's expected rate cuts, institutional fund inflows, and global policy support, this year's 'Christmas coin sentiment' has ignited early, with investor sentiment high and the market entering a new growth cycle.
However, market volatility still exists, and caution is needed. Proper position planning and avoidance of high leverage risks are required to capture the best opportunities in this round of market.
