The global investment market entered the Christmas holiday last week. As Europe and America have been the biggest driving forces behind this Bitcoin bull market, the holiday caused the previous European and American buying to cease. Under the routine selling by Asian and Middle Eastern investors, the cryptocurrency market price decline was not a major issue. Bitcoin prices fell from $97,000 to $94,000, with a weekly drop of about 5%. Ethereum also fell from $3,500 to $3,300, with an overall weekly drop of about 4%.
However, South Korea may be one of the few exceptions. Affected by political turmoil, the public has been buying cryptocurrencies, making South Korea the largest major buyer in Asia recently. Jeff Park, the strategy director at Bitwise, pointed out that the South Korean National Assembly recently passed a motion attempting to impeach the prime minister, who is also the acting president. The news of the acting president's impeachment led to a significant depreciation of the Korean won, further increasing the popularity of cryptocurrencies as a store of value.
Due to strict capital control policies, the prices of crypto assets on South Korean exchanges are typically higher than those in international markets. Currently, the price of Bitcoin on the South Korean Upbit exchange is 144.45 million KRW (approximately $98,000), while on the U.S. Coinbase exchange it is $95,100, showing a significant kimchi premium, which indicates that retail investors in Korea are buying Bitcoin in large quantities, with trading volumes comparable to those in the Korean stock market.
Next, we are seeing more and more companies adopting Bitcoin to transform into investment firms. The American energy management company KULR Technology Group announced on December 26 that it would adopt a Bitcoin investment strategy, purchasing 217.18 BTC at a total price of approximately $21 million. The average price per Bitcoin for this transaction was $96,556.53, and the company stated that this purchase is the first step in its multiple purchase plan.
Additionally, the company has partnered with Coinbase Prime to provide institutional-grade wallet custody and USDC trading services, planning to invest up to 90% of its surplus cash in Bitcoin. Following the announcement, its stock price rose by 40.35% within 24 hours, indicating that the market is clearly accepting this strategy.
Under the banner of regulatory relaxation during the Trump administration, more and more innovative investment products are being brewed for launch. In this issue, we will discuss the 'Bitcoin Standard Enterprise ETF' product proposed by Bitwise, exploring the goals of this active fund and the subsequent impact on institutional willingness to invest in Bitcoin.
Sources: MICA RESEARCH A. December 23 Cryptoquant: Bitcoin demand surges, supply drops to 2020 low.
According to Cryptoquant data, the demand for Bitcoin is rapidly growing, while seller liquidity has dropped to its lowest level since 2020. Market demand is exceeding supply. Since September 2024, monthly Bitcoin demand has grown to 228,000 BTC, but the available supply of Bitcoin for sale has significantly decreased. These sources of supply include cryptocurrency exchanges, over-the-counter trading platforms, miners, and Bitcoin held by Grayscale Bitcoin Trust.
In addition, long-term investors are also actively entering the market, with the holdings of Bitcoin 'accumulation addresses' reaching a new high of 495,000 BTC in monthly increases. At the same time, Bitcoin inventory on over-the-counter (OTC) platforms has decreased by 26,000 BTC, further reducing by 40,000 BTC since November 20. The analysis team believes that OTC platforms primarily serve institutions and large buyers, reflecting that demand significantly exceeds supply.
As of now, the liquidity of Bitcoin sellers is only 33.97 million BTC, down 678,000 coins since the beginning of the year, further reducing selling pressure in the market. Additionally, the liquidity inventory ratio (the number of months current inventory can meet demand) has dropped from 41 months in October to 6.6 months, indicating that the demand for Bitcoin in the market is rapidly increasing while supply and liquidity are significantly shrinking.
B. December 24 MicroStrategy again purchased 5,262 Bitcoins, undeterred by price corrections.
According to MicroStrategy founder Michael Saylor's post on social media X, the company announced on Monday that it purchased Bitcoin again, this time acquiring 5,262 BTC for a budget of less than $1 billion. This acquisition is more conservative compared to past large-scale purchases, with an average purchase price of $106,662 per coin, representing a regular investment at a high point before Bitcoin's correction, which does not significantly impact the position.
The company's current Bitcoin holdings have reached 444,262 BTC, most of which were purchased before the recent price correction. To date, MicroStrategy has spent a total of $27.7 billion acquiring Bitcoin, and its current value has risen to $42.6 billion. Even though Bitcoin prices have recently declined, the profits remain astonishing, with a cumulative increase of 54%.
Another Japanese company, Metaplanet, also expressed confidence and announced this week through a press release that it purchased nearly 620 BTC, setting a record for its largest single purchase. This transaction was financed through the issuance of zero-interest bonds, with the raised funds of approximately $60.6 million invested in Bitcoin, bringing its total holdings to 1,762 BTC, with a total value of about $168 million, which has driven its stock price to continue rising.
C. December 25 CoinShares: Despite the decline in Bitcoin prices, there was still net inflow of funds.
The fluctuations in Bitcoin prices are closely related to the capital movements of its spot ETF or ETP. Two weeks ago, the crypto market was in great condition, and according to Coinshares data, global crypto asset investment products attracted $308 million in inflows in a single week. However, following the Fed's hawkish comments on December 19, there was a significant outflow of $576 million, with total outflows reaching $1 billion over the weekend.
Additionally, due to the recent price decline, the total value of assets managed by cryptocurrency exchange-traded products (ETPs) dropped by $17.7 billion, indicating a significant outflow of funds. By this week's Christmas trading situation, Bitcoin experienced some outflow during the week, but ultimately achieved a net inflow of $375 million against the trend, reflecting that market sentiment is not as pessimistic as imagined. In contrast, the outflow from multi-asset investment products was the most significant, reaching $121 million.
It is worth noting that Ethereum continues to attract investor attention, with a net inflow of $51 million. Solana had a net outflow of $8.7 million, and XRP saw a net inflow of $8.8 million. Other tokens such as LINK, ADA, and LTC also experienced slight net inflows. In terms of regional performance, the U.S. led with an inflow of $567 million, indicating that the U.S. continues to dominate the fluctuations in the cryptocurrency market.
The imagination space for the regulatory relaxation theme is abundant, which helps the price of cryptocurrencies to continue to rise.
This active fund will focus on investing in publicly listed companies that meet the 'Bitcoin Standard.' These companies must hold at least 1,000 BTC in their corporate funds. The criteria for selecting investment targets for the fund include a minimum market capitalization of $100 million, daily trading liquidity of over $1 million, and a public share ratio of less than 10%.
Bitwise will update the fund's holdings every quarter based on publicly available corporate reports. Unlike traditional ETFs that allocate based on company market capitalization, this fund rebalances based on the market value of the companies' Bitcoin holdings, setting a maximum investment ratio of 25% for each company to ensure investment balance and risk diversification.
According to official documents, there are about 30 U.S. publicly listed companies that meet the criteria, including MicroStrategy (which holds over 444,000 BTC), Marathon Digital, Riot, Tesla, and Hut 8, reflecting the increasing adoption of Bitcoin by global enterprises. Many companies hope to enhance their stock value through Bitcoin, and more and more companies facing transformation difficulties are simply transitioning into Bitcoin investment companies.
They are gradually buying Bitcoin through leveraged financing. These companies provide investors with another option for exposure to Bitcoin, but many investment firms are still unable to directly invest in Bitcoin or Bitcoin spot ETFs due to policy constraints. Currently, Bitcoin spot ETFs have not yet provided leverage; these Bitcoin investment companies are investing in Bitcoin through leverage and are classified as regular publicly listed companies, offering additional investment options.
Investors are gradually shifting their focus from Bitcoin to small and medium-sized tokens, with a recent wave of price increases. Besides major chain coins like SOL, XRP, and AVAX, DeFi tokens also performed well, but the upward momentum did not last long, with most tokens experiencing significant declines between 5% and 15%. The primary reason was the entry of European and American investors into the Christmas holiday, leading to routine sell-offs by Asian and Middle Eastern investors, without any structural changes behind it.
We believe that the regulatory relaxation theme promoted by the Trump administration continues to exist, and we expect more types of cryptocurrencies to be listed for trading on U.S. stocks through spot ETFs or other derivative financial products. This would attract significant net inflows of capital, following the models of Bitcoin and Ethereum. Furthermore, DeFi crypto companies are likely to have broader innovative space, such as obtaining the issuance rights for crypto credit cards, launching higher leverage staking products, and more token mechanics combining with AI models, all of which will boost the prices of DeFi infrastructure or oracle tokens. This theme still persists.
Last week's review [MICA RESEARCH]: The Fed's hawkish stance caused a market correction, but the trend of rate cuts remains unchanged.
Statement: The article only represents the author's personal views and opinions and does not reflect the views and positions of the blockchain community. All content and opinions are for reference only and do not constitute investment advice. Investors should make their own decisions and trades, and the author and the blockchain community will not bear any responsibility for any direct or indirect losses incurred by investors' trades.
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"[MICA RESEARCH] The 'regulatory relaxation' theme is expected to continue, with significant upside potential in the future." This article was first published on (Blockchain Community).
