Since Donald Trump won the US election, the crypto market has experienced explosive growth. As the leader, Bitcoin saw a monthly increase of over 37% in November, with its value exceeding $26,000, driving the entire crypto market capitalization to surge over $1 trillion, an increase of about 45%. This surge not only made Bitcoin the focus of investors' attention again, but also brought a long-awaited upward trend for Altcoins, with the market sentiment being high.
Bitcoin consolidates, Altcoins surge
After consecutively hitting new price highs, Bitcoin encountered resistance at the $100,000 level and experienced a volatile trend. Market funds have started to shift towards Altcoins. Over the past week, the market share of Altcoins has risen from 8.91% to 11.0%, and their daily trading volume has also increased from 23% to 37%. Both old and new Altcoins have started a sector rotation, with astonishing gains. The total market capitalization of Altcoins has increased by nearly 70% in November.
Among them, the performance of the veteran Altcoin XRP has been particularly impressive. With the reduction in SEC chairman's resignation litigation pressure, the XRP spot ETF application, and the support from Korean whales, XRP surged 400% in a single month, reaching a historical high. Its market capitalization has surpassed USDT and Solana, ranking third in the crypto market, and has even surpassed Pinduoduo, rising to the 138th position among global mainstream assets.
In the crypto market, the value of Altcoins is often difficult to quantify, and can only be roughly estimated by benchmarking against the leading projects in the sector. The surge in XRP's fully diluted valuation (FDV) to over $260 billion has reshaped the valuation reference system for most Altcoins, unleashing the potential of many Altcoins and demonstrating a strong money-making effect. The arrival of the "Altcoin season" has made the market more lively.
Can Bitcoin reach new highs in December?
Bitcoin experienced a rapid rise in November, leading to a large number of profit-taking trades, and the $100,000 level has remained elusive. Data also shows that the net holdings of long-term Bitcoin holders are declining, approaching the level around March 2024, and many investors are beginning to worry that the current crypto market is overheated. However, from multiple perspectives, Bitcoin still has significant upside potential in December.
1. The Santa Claus rally in the US stock market boosts market optimism
As the holiday season approaches, the US stock market often experiences a "Santa Claus rally", where stock prices tend to rise around Christmas. This upward trend is often influenced by holiday optimism, increased holiday consumption, and investors' year-end trading activities. Since 1950, the S&P 500 index has had an average gain of about 1.3% during the Santa Claus rally period.
Given the high correlation between the US stock market and the crypto market, the positive sentiment in the US stock market is expected to provide a stable external environment for the crypto market.
2. Bitcoin has seen significant gains in December following each halving event
Data shows that after Bitcoin's halvings in 2012, 2016, and 2020, the gains in December have been remarkable, with a success rate of 100%. In 2012, Bitcoin rose from $12.57 to $13.45 in December, a return of 7%. In 2016, the return was 30.8%, and in 2020, the return was 46.92%. The return this December is still worth looking forward to. It's worth noting that Bitcoin's performance in September this year, with a 7.35% gain, was the best on record. Historically, whenever Bitcoin has gained in September, it has also risen by the end of the year. Based on this historical pattern, Bitcoin has a good chance of seeing a significant upside this month.
3. The Fed is likely to continue cutting interest rates in December
Interest rate cuts have been a long-term focus of the market. The Fed announced a 0.5% rate cut in September and a further 0.25% cut in November, accelerating the global pace of rate cuts and boosting global market sentiment. Recent US economic data shows that inflation remains stubborn, but the downward trend has not changed. Unless the November employment or inflation report is surprisingly strong, the Fed is likely to continue cutting rates in December. This will prompt capital that was previously in a wait-and-see state or confined to low-yield investments to seek higher-yielding investment channels, accelerating the flow of global capital into risk assets. As a highly anticipated asset with significant appreciation potential, Bitcoin is expected to capture a portion of this liquidity.
4. The period before Trump's inauguration is a major hype cycle
Last week, Trump's cabinet was largely formed, with almost all members being crypto enthusiasts, including Trump himself. This "all-in on crypto" stance has significantly increased market expectations for the implementation of crypto-friendly policies in the future, providing an important support for the continuation of the December rally.
Historically, many of Trump's trades peaked around his inauguration in January. Based on past experience, the crypto market has reacted extremely strongly, whether it was the shooting incident Trump faced or his successful election. Although the inauguration on January 20th is seen as a potential market peak, the accumulation of market sentiment is often reflected earlier. From the current perspective, December may become a key window for investors to position themselves.
5. Continuous inflow of ETF and on-chain capital
The continuous inflow of ETF and on-chain capital has also provided strong support for the crypto market's momentum. Benefiting from Trump's promise to implement policies favorable to the crypto industry, Bitcoin and Ethereum ETFs set new records for net inflows in November, reaching $6.5 billion and $1.1 billion respectively. This surge indicates strong market demand for these two crypto assets.
On the other hand, the issuance of USDT has also been accelerating, with over $13 billion issued in November, the fastest pace so far in 2021. The total market capitalization of stablecoins has now surpassed $193 billion, a new all-time high, with a 2.3% increase in the past week.
Furthermore, the rise of the Phantom wallet has provided an observation window for the market. On November 21st, within just half a month, Phantom wallet rose from obscurity to become the #1 tool app on the Apple App Store, and its overall ranking also reached as high as #6. According to Similarweb data analysis, Phantom's recent US user traffic accounted for 27.38% and has grown by 24.82% in the past month, indicating that the crypto market is attracting more and more participants.
Summary
Although Bitcoin faced some resistance after its rapid rise in November, the positive factors from multiple aspects are working together on the crypto market, setting an optimistic tone for Bitcoin and the broader Altcoin sector's performance in December. Bitcoin may well end 2024 with an overwhelming positive momentum. 4E, as the official partner of the Argentine national team, supports the spot and contract trading of over 200 crypto assets, including Bitcoin, Ethereum, SOL, XRP, and others, covering various sectors with high liquidity and low fees.
At the same time, 4E will also integrate traditional financial assets into the platform, establishing a comprehensive one-stop trading system covering from deposit to , and then to US stocks, indices, foreign exchange, and bulk gold, with more than 600 different risk level assets, and holding USDT can invest with one click at any time. In addition, the 4E platform has a $100 million risk protection fund to add another layer of protection for the safety of users' funds. With the help of 4E, investors can keep up with market dynamics, flexibly adjust their strategies and leverage, and seize every potential opportunity.
