The global investment market entered the Christmas holiday last week. Since Europe and the US have been the biggest drivers of this Bitcoin bull market, the holiday has led to a decline in past buying from these regions, while Asian and Middle Eastern investors have been selling as per past funding operations. As a result, the cryptocurrency market prices have not faced many issues, with Bitcoin prices dropping from $97,000 to $94,000, a weekly decline of about 5%. Ether fell from $3,500 to $3,300, with an overall weekly decline of about 4%.

However, South Korea may be one of the few counterexamples. Due to political turmoil, the public is buying cryptocurrencies en masse, making South Korea the largest buying force in Asia lately. Jeff Park, the strategy director of Bitwise, pointed out that the South Korean National Assembly recently passed a motion to impeach the Prime Minister and 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 usually higher than those on international markets. Currently, the price of Bitcoin on South Korea's Upbit exchange is 144.45 million Korean won (approximately $98,000), while on the US Coinbase exchange it is $95,100, showing significant kimchi premium, indicating that South Korean retail investors are buying Bitcoin in large quantities, with transaction volumes comparable to those on the Korean stock market.

Next, we are seeing more and more companies adopting Bitcoin to transform into investment firms. The US energy management company KULR Technology Group announced on December 26 that it has adopted a Bitcoin investment strategy, purchasing 217.18 BTC at a total price of about $21 million. The average price for each Bitcoin in this transaction was $96,556.53, and the company stated that this purchase is the first step in its multiple purchase plan.

Furthermore, 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 in the future. After the announcement, its stock price rose by 40.35% within 24 hours, clearly indicating market support for this strategy.

Under the banner of relaxed regulation during the Trump administration, an increasing number of innovative investment products are being developed. In this issue, we will discuss the 'Bitcoin Standard Enterprise ETF' proposed by Bitwise, exploring the objectives of this actively managed fund and the impact on institutional willingness to invest in Bitcoin.



A. On December 23, Cryptoquant: Bitcoin demand surged, and supply dropped to its lowest point in 2020.

According to Cryptoquant data, the demand for Bitcoin is growing rapidly, while seller liquidity has dropped to its lowest level since 2020. Market demand is exceeding supply. Since September 2024, monthly demand for Bitcoin has grown to 228,000 BTC, but the supply of Bitcoin available 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.

Moreover, long-term investors are also actively entering the market, with the holdings of Bitcoin 'accumulation addresses' reaching a new high of 495,000 BTC increase in a month. At the same time, Bitcoin inventories on over-the-counter (OTC) platforms decreased by 26,000 BTC, and further decreased by 40,000 BTC since November 20. The analysis team believes that OTC platforms mainly serve institutions and large buyers, reflecting that demand significantly exceeds supply.

As of now, the seller liquidity of Bitcoin is only 33.97 million BTC, having decreased by 678,000 since the beginning of the year, further reducing market selling pressure. Additionally, the liquidity inventory ratio (the number of months the existing inventory can meet demand) has decreased from 41 months in October to 6.6 months, indicating that Bitcoin market demand is rapidly growing, while supply and liquidity are clearly shrinking.

B. On December 24, MicroStrategy bought another 5,262 Bitcoins, undeterred by the price correction.

According to a post by MicroStrategy founder Michael Saylor on X community, the company announced on Monday that it had again purchased Bitcoin, this time acquiring 5,262 BTC with a budget of less than $1 billion. This acquisition is more conservative compared to past large purchases, purchasing at an average price of $106,662 per Bitcoin, which is a regular investment at a high point before the Bitcoin correction, having little impact on the position.

The company's current Bitcoin holdings have reached 444,262 BTC, most of which were purchased before the price of Bitcoin corrected. To date, MicroStrategy has spent a total of $27.7 billion on Bitcoin, which has increased in value to $42.6 billion, even though the price of Bitcoin has recently declined, the profits remain astonishing, with a cumulative increase of 54%.

Another Japanese company, Metaplanet, also expressed unwavering confidence, announcing this week through a press release that it purchased nearly 620 BTC, setting its largest single purchase volume. This transaction was financed through the issuance of zero-interest bonds, and approximately $60.6 million raised will be invested in Bitcoin, bringing its total holdings to 1,762 BTC, with a total value of about $168 million, driving its stock price to continue to rise.

C. On December 25, CoinShares: Even though the price of Bitcoin has fallen, it ultimately still achieved net inflows of funds.

The volatility of Bitcoin prices is closely related to the changes in funds for its spot ETF or ETP. Two weeks ago, the cryptocurrency market was performing well, and according to Coinshares data, global cryptocurrency investment products attracted $308 million in funds in a single week. However, following the Fed's hawkish remarks on December 19, there was a significant outflow of $576 million, with the total outflow reaching $1 billion over the weekend.

Additionally, due to the recent price drop, the total value of managed assets for cryptocurrency exchange-traded products (ETPs) has decreased 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 it seems. In contrast, the outflow of multi-asset investment products was the most obvious, reaching $12.1 million.

It is noteworthy that Ether continues to attract investor attention, with a net inflow of $51 million. Solana saw a net outflow of $8.7 million, while XRP saw a net inflow of $8.8 million. Other tokens like LINK, ADA, and LTC also experienced slight net inflows. Regionally, the US leads in attracting $567 million in inflows, indicating that the US continues to dominate the fluctuations in the cryptocurrency market.

The theme of regulatory relaxation has abundant imagination space, which helps the price of cryptocurrencies continue to rise.

This actively managed 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 include a market capitalization of at least $100 million, daily trading liquidity of over $1 million, and less than 10% of shares being unlisted.

Bitwise will update the fund's holdings quarterly based on publicly available corporate reports. Unlike traditional ETFs that allocate based on company market capitalization, this fund rebalances according to the market capitalization of Bitcoin held by the companies, setting a maximum investment proportion of 25% for each company to ensure investment balance and risk diversification.

According to official documents, about 30 publicly listed companies in the US qualify, including MicroStrategy (which holds over 444,000 BTC), Marathon Digital, Riot, Tesla, and Hut 8, reflecting a gradual increase in global corporate adoption of Bitcoin. Many companies hope to enhance their stock value through Bitcoin, with an increasing number of companies facing transformation difficulties in their primary businesses simply transforming into Bitcoin investment companies.

Their operational model involves leveraging to buy Bitcoin, providing investors with an alternative option for Bitcoin exposure. However, many investment firms are still unable to directly invest in Bitcoin or Bitcoin spot ETFs due to policy restrictions, and currently, Bitcoin spot ETFs do not offer leverage. These Bitcoin investment companies invest in Bitcoin through leverage and are classified as general public companies, providing additional investment options.

Investors are gradually shifting their focus from Bitcoin to small and medium-sized tokens, with a recent wave of price increases. Aside from major chain coins like SOL, XRP, and AVAX, DeFi tokens also performed well. However, the momentum of price increases did not last long, with most tokens showing significant declines ranging between 5% to 15%. This is mainly due to investors in Europe and the US entering the Christmas holiday, leading to routine selling by investors in Asia and the Middle East, with no structural changes behind it.

We believe that the theme of regulatory relaxation that the Trump administration is promoting still exists, and we expect more types of cryptocurrency tokens to be listed on US stock trading through spot ETFs or other derivative financial products, emulating the models of Bitcoin and Ether to attract significant net inflows of funds. Additionally, DeFi crypto companies are also nearing broader innovation space, such as obtaining the right to issue crypto credit cards, launching higher leverage staking products, and more token play combined with AI models, all of which will drive up the prices of DeFi infrastructure or oracle tokens, and this theme still exists.