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- Bitcoin Slides and Stocks Tumble: Fed’s Move Shakes The Market
Bitcoin Slides and Stocks Tumble: Fed’s Move Shakes The Market
News On Bitcoin - Week 51 2024
TL;DR
BTC is down
Bitcoin dominance is up
Grayscale Bitcoin Trust Outflows Surge
Bitcoin Surges Past Gold in Value
$1 Billion Liquidated in Crypto in 24 hours
BlackRock Sparks Debate Over Bitcoin's 21M Supply Cap
Ohio Proposes Bitcoin Reserve
El Salvador Adjusts Bitcoin Policy in $1.4B IMF Loan Deal
MARA's $1.5B Bitcoin Acquisition Boosts Holdings
Hut 8 Surpasses $1 Billion in Bitcoin Holdings
Bitcoin Mining’s Role in Europe’s Energy Transition
Sponsor of the Week
VaultCraft launches V2, TVL skyrockets above $100M
VaultCraft launches V2, partners with Safe, and secures $100M+ in Bitcoin
Matrixport, Asia’s leading crypto providers, commits $100M+ in Bitcoin
OKX Web3 to launch Safe Smart Vaults with $250K+ in rewards
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Bitcoin Price
Crypto is down this week, with BTC down by 4.6% and ETH down by 11.4%:
Bitcoin dominance has increased over the week, starting from 52.79% to a high of 56.04% and ending at 54.5%. Investor sentiment, regulatory changes, technological advancements, and the overall growth of the cryptocurrency sector shape Bitcoin's market dominance. Its reputation as "digital gold" also enhances its position, making it a key player in the market.
Bitcoin’s market correction has intensified, with prices falling sharply from their record high of $108,360. Over the past week, the cryptocurrency has seen an 11% decline, prompting debate among analysts about the potential depth of this retracement.
The broader financial environment, including Federal Reserve decisions and stock market turbulence, adds layers of complexity to Bitcoin’s trajectory.
Recent trading activity reflects heightened uncertainty. Bitcoin briefly dipped to $92,777 before recovering to $95,000, a level viewed as critical by traders. Key support lies in the $88,000–$90,000 range, where historical consolidation suggests potential stability.
However, a failure to hold this zone could lead to further declines, with bearish forecasts targeting the 50-week exponential moving average (EMA) at $66,600 or even the 0.786 Fibonacci retracement at $57,000.
Technical indicators paint a mixed picture. Bearish divergence in the weekly Relative Strength Index (RSI) signals caution, mirroring patterns seen during major market corrections in the past.
On shorter timeframes, Bitcoin's price shows signs of forming an ascending triangle, with resistance at $102,000. A breakout above this level could negate bearish signals and propel the price toward $114,650, based on the pattern’s projected move.
The correction aligns with broader macroeconomic pressures. The Federal Reserve’s decision to cut interest rates for the third time this year, coupled with its forecast of fewer rate reductions in 2025, has created ripples across financial markets.
Stock indices fell sharply, with the S&P 500 and Russell 2000 recording their steepest drops in months. The Dow Jones industrial average extended a ten-day losing streak, its worst since 1974. Rising bond yields and a strengthening U.S. dollar added to the risk-off sentiment.
For Bitcoin, the Fed’s policy signals are a double-edged sword. Tighter monetary conditions and a stronger dollar often weigh on speculative assets, making it harder for Bitcoin to sustain its upward momentum.
At the same time, any potential weakness in the traditional financial system could reignite interest in cryptocurrencies as alternative investments.
Market dynamics are also influenced by spot selling pressure, particularly on platforms like Coinbase, where trading activity has surged.
Analysts have noted a spike in realized losses, with $28.9 million recorded over the past five days—320% above the weekly average. Such losses typically coincide with market bottoms, offering a potential counterbalance to bearish sentiment.
Analysts remain divided on Bitcoin’s next move. Some, like Captain Faibik, view the current pullback as a healthy reset, anticipating a rebound from $94,000.
Others, including Cold Blooded Shiller, argue for a deeper correction toward $85,000, citing past price behavior as precedent. A decisive daily close above $95,000 is seen as essential for invalidating the bearish outlook and regaining positive momentum.
As Bitcoin navigates this correction, its price action will likely depend on a mix of technical factors and macroeconomic developments.
Traders are closely watching key levels and broader market trends, with the cryptocurrency’s short-term trajectory poised to offer critical insights into its resilience amid heightened volatility.
Bitcoin (BTCUSD) Analysis:
As of December 20, 2024, Bitcoin (BTC) is trading at $97,227. The short-term outlook is neutral, with support at $93,000 and resistance at $100,000. A break through either of these levels could signal the next directional move. In the medium term, Bitcoin has strong support at $70,000, and the price objective of $84,547 has been met, indicating potential consolidation or slight upward movement. The long-term trend remains bullish, with support at $71,000 and no immediate resistance, suggesting continued upward momentum.
Bitcoin (BTC): Support at $93,000; Resistance at $100,000.
Market Outlook:
Bitcoin (BTC) is currently in a neutral short-term position, with potential for consolidation between $93,000 and $100,000. The medium-term outlook remains stable, with strong support at $70,000 and resistance at $106,000. Long-term trends remain bullish, with support at $71,000 and no immediate resistance.
BTC/ETH ratio has seen an increase:
The BTC to ETH conversion rate has experienced a moderate increase over the past week. Starting from 26.23 ETH per Bitcoin on December 14, the rate gradually rose to 28.21 ETH on December 20. This represents an increase of approximately 7.5% during this period, with minor fluctuations along the way. Despite some daily variations, the overall trend has been upward, indicating Bitcoin's relative strength over Ethereum.
“If you’re cheering every $1,000 ATH increment then you’re making noise for every 1% bump, which is nothing. For sanity’s sake I propose increasing celebratory gaps to $10k.”
Financial News
Grayscale Bitcoin Trust (GBTC) experienced over $21 billion in outflows since January, averaging $89.9 million daily, making it the only U.S. spot Bitcoin ETF with a negative net flow. These outflows eclipse the $20.7 billion inflows of nine other spot Bitcoin ETFs, including Fidelity and Valkyrie funds.
Despite GBTC’s losses, the broader Bitcoin ETF market surged to $35.5 billion in investments, led by BlackRock’s iShares Bitcoin Trust, which attracted $35.9 billion in inflows. Similarly, Grayscale’s Ethereum Trust ETF (ETHE) reported $3.5 billion in outflows, contrasting with other Ethereum ETFs like BlackRock’s ETHA, which garnered nearly $3.2 billion in investments.
The Financial Accounting Standards Board (FASB) has enacted new rules, effective December 15, 2024, requiring companies to report Bitcoin and eligible digital assets at fair value. This replaces the outdated method of treating Bitcoin as an intangible asset, which often resulted in incomplete financials.
The updated standards allow firms to recognize both gains and losses, improving transparency and encouraging adoption. Industry leaders, including MicroStrategy’s Michael Saylor, predict this change will drive institutional interest. Non-fungible tokens and wrapped tokens are excluded.
Bitcoin has reached an all-time high against gold, with 1 BTC equaling 40 ounces of gold, signaling a shift in investor sentiment. Factors include Bitcoin’s fixed supply, institutional adoption, and increasing recognition as an inflation hedge. The rise follows Bitcoin surpassing $106,000, while gold lags at $2,650 per ounce.
Analysts like Peter Brandt predict the ratio could reach 89-to-1. Institutional inflows, including Bitcoin ETFs managing $123 billion, highlight growing trust in the asset. With governments considering Bitcoin as a reserve, its potential to rival or surpass gold is reshaping the traditional financial landscape.
The crypto market witnessed over $1 billion in liquidations within 24 hours, with $856.7 million wiped from long positions. Bitcoin dropped 3.36%, trading at $97,350. Analysts attribute the downturn to unprepared traders following a month-long bullish trend.
Pav Hundal of Swyftx described it as "short-term angst" and expressed hope for a potential "Santa rally." Historical data shows volatility as typical during bull runs, with analysts like Caleb Franzen urging patience. Upcoming market impacts may arise from Donald Trump’s 2025 inauguration, amid speculation of a U.S. Bitcoin strategic reserve.
BitMEX co-founder Arthur Hayes foresees a significant crypto market crash coinciding with Donald Trump’s January 2025 presidential inauguration. In his blog, Hayes cited unrealistic expectations for swift crypto policy changes as a trigger for market disillusionment.
His fund, Maelstrom, plans to sell early and reinvest at lower prices later in 2025. Hayes anticipates a market dump followed by a strong recovery phase. While analysts predict Bitcoin’s mainstream adoption under Trump, Hayes warns of a delay in policy implementation dampening investor optimism. Rumors of MicroStrategy halting BTC acquisitions in early 2025 add to bearish concerns.
Adoption News
BlackRock's recent video on Bitcoin reignited the debate on its 21 million supply cap, suggesting there’s “no guarantee” it can’t change. Bitcoin developers argue altering the cap through consensus would result in a new blockchain, no longer aligning with Satoshi Nakamoto's vision. Critics highlight risks to Bitcoin’s value proposition as a scarce asset.
While miners benefit from current incentives, sustainability concerns grow as subsidies halve over time. Historical resistance, like the 2016–17 Blocksize War, demonstrates the community's reluctance to compromise Bitcoin's core principles, emphasizing that changes, while theoretically possible, face significant resistance from stakeholders.
Ohio has introduced the Bitcoin Reserve Act, making it the third state to explore holding Bitcoin as a treasury reserve, after Texas and Pennsylvania. Sponsored by Rep. Derek Merrin, the bill allows the State Treasurer to allocate Bitcoin as part of Ohio's asset strategy, highlighting its role as a hedge against inflation.
While the current session may delay its passage, it will be reintroduced in 2025. Advocates, including the Ohio Blockchain Council, praise the initiative for technological leadership. Critics cite Bitcoin’s volatility, but proponents argue cautious allocation can mitigate risks and position Ohio at the forefront of digital finance innovation.
Coinbase has defended its decision to delist wBTC in response to BiT Global’s lawsuit, citing “unacceptable risk” due to Justin Sun’s involvement. BiT Global refused to clarify ownership and Sun’s role when questioned, leading Coinbase to delist the token over concerns for customer safety and exchange integrity.
The SEC has previously accused Sun of securities fraud, adding to the controversy. BiT Global alleges Coinbase favored its own token, cbBTC, but the exchange insists risk management drove the decision. The move highlights Coinbase’s firm stance on transparency and marks escalating tensions with the divisive crypto figure.
MicroStrategy has purchased 15,350 BTC for $1.5 billion at an average price of $100,386 per coin, raising its total holdings to 439,000 BTC, valued at $45 billion. The acquisition was funded by selling 3.88 million company shares. With $7.65 billion in equity and $21 billion in fixed-income securities, the firm is well-positioned for future purchases.
Its stock, up 490% this year, rose 4.2% following the announcement. As Bitcoin approaches $100K, MicroStrategy strengthens its role in the Bitcoin ecosystem, leveraging its Nasdaq 100 inclusion and aggressive acquisition strategy to maintain a leadership position in the corporate adoption of digital assets.
El Salvador has agreed to make Bitcoin acceptance voluntary and limit government involvement in Bitcoin-related activities as part of a $1.4 billion loan agreement with the IMF. The deal, aimed at reducing the nation's debt-to-GDP ratio, includes measures to phase out the state-backed Chivo wallet and confine public sector Bitcoin engagement.
Despite these adjustments, El Salvador's National Bitcoin Office reaffirmed its commitment to accumulating Bitcoin. This agreement concludes four years of negotiations following El Salvador's adoption of Bitcoin as legal tender in 2021, while surveys indicate limited public usage of the cryptocurrency for transactions.
Mining News
Amid Europe’s energy crisis, Bitcoin mining is emerging as a key player in stabilizing grids and supporting renewable energy. With renewables comprising 59.7% of Germany’s electricity, their intermittent nature poses challenges.
Bitcoin miners, unlike traditional data centers, adapt by switching on or off based on electricity prices, easing grid pressures. Germany leads with sustainable mining projects, while Austria explores surplus hydroelectric power for grid stability through initiatives like Austrian Power Grid's pilot.
Bitcoin miner MARA acquired $1.5 billion worth of Bitcoin in two months using convertible notes, increasing its holdings to 44,394 BTC, a 200% rise this year. Each Bitcoin was purchased at an average price of $98,529. The acquisitions followed two zero-coupon note issuances totaling $1.925 billion, with conversion prices significantly above market rates.
MARA’s current BTC holdings are valued at $4.45 billion, yielding 22.5% this quarter. Other miners like Hut 8 and Riot Platforms also ramped up Bitcoin purchases in December, underscoring a broader trend of miners accumulating before potential price rallies.
