Bitcoin had touched $99,800 recently, and as it was about to reach the historic price of $100,000, it subsequently adjusted and briefly fell below $91,000. The reason behind this is not particularly special; it is simply that investors began to take profits. After larger positions exited, the price naturally declined. Bitcoin is now back to $97,000 and consolidating, with almost flat weekly gains.
Most analysts believe that Bitcoin has not yet reached the overheating zone of a bull market and still has the potential to rise to $100,000 to $140,000. Multiple trading indicators also show that bullish momentum is strengthening. Blockchain data indicates that retail activity in cryptocurrencies is sluggish, with a recent sell-off of 41,000 BTC, but institutions continue to buy 130,000 BTC. The only short-term correction risk comes from MicroStrategy facing short-selling, with its stock price dropping by 30%. In the long term, Bitcoin still has room for growth, but it may need to take a break in the short term.
It is worth noting that Ethereum has instead launched a counterattack, with the price reaching $3,700, and a weekly increase of 11.2%, far exceeding Bitcoin. This indicates that capital has started to flow from Bitcoin to Ethereum, as traders believe that Bitcoin's upside potential is limited and that Ethereum will provide better returns. This signal establishes the second phase of the bull market, with capital overflowing to other cryptocurrencies.
When Ethereum's price peaks after rising, we expect funds to further flow into smaller competing coins, such as SOL and ADA. This is typically a phenomenon where funds overflow in stages, but the premise is that buying interest remains strong. Currently, the market seems quite robust, but mainstream cryptocurrency holders should be cautious about taking profits, as many have achieved up to 40% returns in just six months, with funds subsequently flowing into competing coins with greater upward potential.
Additionally, recent market regulatory topics are also favorable for the rise of competing coins. Last week, a fund company began applying for competing coin ETFs, including ETFs of cryptocurrencies like XRP, ADA, and SOL, to be listed on U.S. stock markets, potentially viewed by traders as the next trading theme. Let’s talk in detail about the underlying policy basis, as the appointment of the new SEC Chairman and subsequent regulatory guidelines are always the industry's primary focus.
Sources: MICA RESEARCH A. November 26 - Investors begin to take profits, and Bitcoin falls below $93,000.
Investors have started taking profits in the cryptocurrency market, preventing Bitcoin's price from successfully breaking through the $100,000 barrier. Currently, Bitcoin's price has fallen from yesterday down to $93,000. On the other hand, in the past 24 hours, due to forced liquidations of long positions, the total amount of long liquidations in the cryptocurrency market reached $337.6 million, resulting in stronger selling pressure, primarily from cryptocurrency exchanges offering high-leverage contracts.
Analysis points out that, in addition to the liquidation of leveraged positions, long-term investors have also become another major source of selling pressure. According to Glassnode data, investors holding Bitcoin for 6 to 12 months are selling large amounts of Bitcoin, as its average cost is only 71% of the market price (around $57,900) due to the rapid price increase. These investors took advantage of the Bitcoin surge from $74,000 to $99,000 and successfully took profits.
Currently, the buying and selling forces in the market have reversed, shifting from a short-term bullish inclination to an increase in bearish sentiment. As liquidations increase, the number of short positions in the market has significantly risen, with borrowing rates climbing from 0.019 to a high of 0.04, indicating lively trading activity. We are still observing when this round of correction will end, but it can be expected that after overheating, the market will need to take a break for a while.
B. November 28 - Marathon Digital: Bitcoin needs to return to 'American manufacturing'.
In response to Trump's election slogan of 'Bitcoin returns to American manufacturing', Bitcoin's core role as a national economic and geopolitical strategy has received more attention following Trump's victory and his promise to establish a strategic Bitcoin reserve. Cryptocurrency mining company Marathon Holdings has called for the U.S. to actively advance its leadership in the Bitcoin space and view Bitcoin mining as a national security issue.
The company pointed out in a tweet on social media platform X that Bitcoin has limited supply, decentralization, and cross-border transfer characteristics, making it a modern version of digital gold. However, merely holding Bitcoin is not enough; the U.S. must dominate its mining infrastructure, especially in controlling computing power. Controlling Bitcoin's computing power can prioritize acquiring block space and prevent hostile nations from censoring or manipulating transactions.
If the U.S. fails to secure a sufficient share of computing power and block space, it may face external pressures as Bitcoin gradually becomes a financial and geopolitical tool. Additionally, with the global trend of de-dollarization accelerating, if actions are not taken, the U.S. may bear economic and geopolitical risks. Hence, it is recommended that the U.S. establish a strategic reserve of Bitcoin, expand domestic mining operations to control more computing power, reduce dependency on foreign mining chips, and promote the use of renewable energy for mining. Since Marathon Digital also produces mining machines, this move will greatly benefit the company's operations.
C. November 29 - Bitwise submitted an application for a cryptocurrency ETF based on 10 types of cryptocurrency indices.
With Trump about to take office and the new SEC Chairman coming in, U.S. cryptocurrency operators are trying to launch more diversified products. Cryptocurrency fund company Bitwise has submitted a new cryptocurrency ETF application to the SEC, covering the top ten cryptocurrencies, allocated as Bitcoin (BTC) 75.1%, Ethereum (ETH) 16.5%, Solana (SOL) 4.3%, XRP 1.5%, Cardano (ADA) 0.7%, Avalanche (AVAX) 0.6%, and Chainlink (LINK), Bitcoin Cash (BCH) each at 0.4%, Polkadot (DOT) and Uniswap (UNI) each at 0.3%.
This fund conceptually reflects asset prices through weighted proportions and only holds digital assets and cash within the portfolio. The net asset value is calculated based on price data provided by CF Benchmarks, and the custody is entrusted to Coinbase Custody for digital assets, with cash managed by Bank of New York Mellon. The SEC has confirmed receipt of the application but has not yet decided on the approval timeline.
This ETF aims to allow small and medium-sized cryptocurrencies to be traded through an 'index'. If approved, it would mean that operators could almost include products like XRP and SOL, which are not Bitcoin or Ethereum, into the ETF for trading on U.S. stock markets. Regulation is akin to a massive easing, although the market is optimistic about the regulatory relaxation after Trump's election and SEC Chairman Gary Gensler's resignation, analysts believe that cryptocurrencies included in the token ETF still face significant regulatory challenges.
The relaxation of cryptocurrency regulations and the strategic reserve of Bitcoin are currently brewing.
To maintain the growth of the entire cryptocurrency market, investors are looking forward to the next positive wave from 'SEC regulation easing for competing coins', allowing cryptocurrencies outside of Bitcoin and Ethereum to also be traded on U.S. stock exchanges. If so, the entire cryptocurrency market will no longer be limited to exchanges, but will be able to attract capital inflows like Bitcoin and Ethereum, and it is expected that the overall market value will see significant growth. This expectation has risen with the departure of SEC Chairman Gary Gensler.
It has been mentioned that Bitwise has taken the lead in applying to the SEC for a 'top ten cryptocurrencies' index ETF, conceptually similar to the S&P 500 ETF, which will package the top 10 cryptocurrencies by market cap into a fund for trading. This approach aims to allow major chain coins like SOL and ADA to enter the ETF market, equivalent to having their own spot ETF. However, this concept, as previously mentioned, remains quite challenging and is a tactic for fund companies to test the regulatory limits.
We believe it is still too early to expect regulatory easing. Fund companies may be somewhat overly optimistic, but applying for ETFs does not incur significant costs and is still worth trying. From January 20, when Trump takes office, to when the entire team is in place to promote regulatory reform, it will take at least six months. However, the community's sentiment is that regulations will open up immediately once Trump takes office, adding a degree of certainty, but the subsequent potential remains vast.
In addition to fund companies using Trump to break through regulations, U.S. mining operators and chip designers are also gaining market favor through this wave of Trump-related topics. Firstly, Marathon Digital responded to Trump's earlier call for 'Bitcoin to return to American manufacturing', hoping the U.S. government can establish a strategic Bitcoin reserve and control mining power. The proposal for the government to promote the construction of Bitcoin mines is beneficial for American mining operators. Since this company also designs its own mining chips, this statement is undoubtedly a lobby for the government to launch favorable policies for U.S. mining operators. The market is very receptive to this statement, with MARA stock price surging 15% in a week, and another miner, Riot, also seeing a 10% increase.
The above two trends show that the cryptocurrency industry is gradually delivering on investors' expectations. However, it is difficult to assess to what extent this can be realized, as it depends on the new U.S. government's true view of the cryptocurrency industry. From our perspective, regulations may not relax too much, but enforcement actions may decrease. Spot ETFs will remain focused on Bitcoin and Ethereum, and while XRP may have some listing opportunities, they are not significant.
As for the strategic reserve of Bitcoin, it may be more difficult. Acquiring Bitcoin by U.S. companies may be the more ideal choice. Companies like MicroStrategy and Tesla could hold a certain amount of Bitcoin. The future direction of the Trump administration will likely be a smaller government, stimulating the economy through tax cuts. It will be more challenging to subsidize Bitcoin mining operations or purchase Bitcoin, but cryptocurrency regulations may indeed ease. For example, NFTs and DeFi trading may make a comeback, laying the groundwork for the next phase of competing coins' price increases.
Last week’s review: Can Bitcoin still attack the $100,000 barrier? What risks does the market face?
Disclaimer: The article only represents the author's personal views and opinions and does not represent the views and positions of Blockcast. All content and viewpoints are for reference only and do not constitute investment advice. Investors should make their own decisions and trades, and the author and Blockcast will not bear any responsibility for direct or indirect losses incurred by investors' trading activities.
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"MICA RESEARCH: Bitcoin's rally pauses, capital flows into competing coins" was first published on (Blockcast).
