Last week, BTC showed an "M-shaped" top reversal trend, with large price fluctuations. Although there were multiple instances of sharp increases and decreases, there was still some buying support at the low levels. From December 25 to 26, BTC surged twice to $100,000, and reached a clear high point at $99,963.7, after which the BTC price oscillated within a downward channel, repeatedly finding support near $91,530.45, forming a long-term key support level. The bulls attempted to resist, but the overall trend was still a decline accompanied by increased trading volume, and the rebounds were accompanied by decreased volume, indicating that the market is still dominated by bears. The current BTC price is $94,540.02 (the above data is from the Binance spot market, as of 4:30 pm on December 31).
Since Trump's election, the capital inflow into spot ETH ETFs has increased significantly, with the growth trend even surpassing that of spot BTC ETFs. Last week, spot BTC ETFs saw a net outflow of $388 million, while spot ETH ETFs saw a net inflow of $349 million. In January, as Trump is about to take office, this may further drive ETH to become the best-performing mainstream token in the next quarter.
Market Interpretation
Surge in Crypto Investors in South Korea, Won Depreciation Drives Premium Trades
On December 28, CryptoQuant CEO Ki Young Ju pointed out that the South Korean won exchange rate has fallen to a 15-year low, prompting South Korean investors to exchange won for BTC and USDT at a 3-5% premium on exchanges like Upbit to avoid exchange rate risks.
As of November, the number of South Korean crypto investors has exceeded 15.59 million, accounting for more than 30% of the total population. This growth is closely related to US President-elect Trump's promise to support the crypto industry, and the rise in BTC prices has further driven this trend. The total crypto holdings of South Korean investors have reached 102.6 trillion won (about $708 billion), a significant increase from October.
As South Korean investors' interest in cryptocurrencies increases and exchange rate risks rise, premium trades in the crypto market have become more prominent, and the market's demand for hedging against assets like BTC and USDT has increased.
US Debt Ceiling Crisis May Trigger Downside Risks for BTC
On December 30, US Treasury Secretary Yellen warned that the debt ceiling will be reached in mid-January 2025, and the risk-averse sentiment in the global market is rising. She stated that the Treasury will take "extraordinary measures" to reduce borrowing after the ceiling is reached, but at the same time urged Congress to act quickly to maintain US credit. This news has triggered volatility in risk assets, with the major US stock indices falling by about 1%, and BTC also falling 4% from its intraday high.
Furthermore, the debt issue in the macroeconomic context is also a core variable. Since the US established the debt ceiling in 1939, its total national debt has exceeded $36.2 trillion. In the current environment of global macroeconomic turmoil and political uncertainty, the BTC market may face greater pressure.
Institutional BTC Adoption Accelerates in 2024, KULR Technology Purchases 217.18 BTC for $21 Million
From the US approval of the spot BTC ETF to more companies including BTC in their asset reserve plans, BTC is becoming a mainstream asset. BTC has risen nearly 130% this year, approaching the psychological barrier of $100,000. In January, the net inflow into ETFs reached $36 billion, with holdings exceeding 1 million BTC.
This trend began with MicroStrategy in 2020 and has attracted more companies to participate. The latest addition is KULR Technology, which produces energy storage products for the aerospace industry. The company purchased 217.18 BTC for $21 million and plans to invest up to 90% of its surplus cash in BTC. Meanwhile, Bitwise has filed for a BTC Standard Company ETF that will track stocks of companies holding over 1,000 BTC, and Strive Asset Management has filed for a BTC bond ETF that will provide exposure to companies with BTC-denominated bonds, further diversifying BTC investment.
With the continued participation of institutions, the mainstream adoption of crypto assets is rapidly developing, and BTC is seen as a long-term investment tool to hedge against inflation and geopolitical risks.
Trump to Take Office as President on January 20, Expected to Issue at Least 25 Executive Orders
After Trump's successful presidential election in early November, the market experienced a month-long consecutive rally. Trump has presented himself as crypto-friendly, and his nominees for various department heads are also largely pro-crypto market figures. The much-criticized SEC chairman is also about to step down, which has led the market to generally hold an optimistic attitude towards the future of the crypto market.
According to Coinbase data, the proportion and number of incoming congressmen who are supportive of crypto are significantly higher than the previous term. Michael Rosen, Chief Investment Officer of Angeles Investments, stated: "Trump's inauguration ceremony may also bring some surprises to the market. It is expected that he will issue at least 25 executive orders on his first day in office, covering a range of issues from immigration to energy and crypto currency policies."
Market Hotspots
FTX to Begin First Round of Cash Debt Repayment, Inflow of Compensation Indirectly Reduces Selling Pressure
On December 17, FTX and its affiliated debtors announced that the court-approved Chapter 11 reorganization plan will officially take effect on January 3, 2025. The first round of distribution will be launched within 60 days after the effective date, targeting only the approved creditors in the Convenience Classes. FTX has reached agreements with crypto custodian BitGo and trading platform Kraken to provide asset distribution services for retail and institutional clients.
According to data disclosed by HOD L1 5 Capital, the first round of repayment distribution on January 3 will include $16 billion in cash. Previously, some tokens held by FTX/Alameda, such as SOL/WLD, have been largely sold off. Creditors will receive compensation in cash rather than tokens, indirectly reducing market selling pressure and increasing the probability of the compensation funds re-entering the crypto market, thereby boosting market sentiment.
Tether Clarifies Rumors of USDT Becoming Illegal in Europe
Recently, there have been rumors that USDT will be deemed illegal in Europe by December 30, 2024, causing market concerns. In response, on December 29, Tether CEO Paolo Ardoino repeatedly spoke out on the social media platform X, clarifying this information and calling it "FUD". He clearly stated that USDT will not lose its legality on the aforementioned date or in the near future.
According to the EU's Crypto Asset Markets (MiCA) regulation, stablecoin issuers need to meet certain requirements, but the regulation provides a transition period of 6 to 18 months, meaning that USDT's legal status is not currently under threat. In addition, Tether plans to launch new stablecoins (such as EURQ and USDQ) that comply with MiCA standards to ensure its compliance and continued operation in the European market.
It is worth mentioning that although MiCA requires stablecoin operators to deposit more than 30% of their liquidity in banks, Tether has expressed reservations about this rule, believing that it may have an adverse impact on the liquidity management of stablecoins. However, as of now, Tether has not encountered any financial problems or illegal activities, and its market position remains stable.
Trump's Inauguration as US President Drives Surge in Crypto OTC Trading Volumes
Recently, multiple crypto trading companies have reported that crypto OTC trading volumes have grown rapidly in the past few months, with Trump's election being a key driving factor. Tim Ogilvie of the Kraken exchange stated that OTC trading volume has increased by 220% year-over-year. Traders pointed out that market participants actively prepared and initiated trades as the election approached. The price increases of mainstream coins like BTC and ETH have driven projects and investors to manage funds and risks in the new price ranges. BitGo also noted that the election result is the dominant factor behind the recent surge in trading volumes, with some companies' trading volumes already returning to the peak levels of the 2021 market.
The United States, the United Kingdom, and the European Union are strengthening the tax regulation of Bit currencies, and investors need to pay attention to tax rates and compliance requirements
The United States, the United Kingdom, and the European Union are strengthening the tax regulation of Bit currencies, affecting investors' operations. In the United States, Bit currency transactions are subject to capital gains tax, with the tax rate depending on the holding period and income; miners and staking rewards are subject to income tax, and from 2025, exchanges will need to report data. The United Kingdom levies a capital gains tax of up to 24% on Bit asset transactions, with a tax-free allowance of £3,000; miners and wage income are subject to income tax and national insurance. Tax rates vary in different EU countries, with Germany exempting holdings of more than a year, and Spain's tax rate reaching 28%. The 2025 MiCA regulation will harmonize some rules and enhance tax transparency.
Disclaimer: The above content does not constitute investment advice, sales offer or purchase offer invitation to residents of the Hong Kong Special Administrative Region, the United States, Singapore, or other countries or regions where such offers or offer invitations may be prohibited by law. Bit asset trading may involve great risk and volatility. Investment decisions should be made after careful consideration of personal circumstances and consultation with financial professionals. Matrixport is not responsible for any investment decisions based on the information provided in this content.
