Last week, the price of Bitcoin fluctuated between $94,000 and $100,000. It dropped to around $95,000, where buying pressure emerged, but buying pressure evaporated near $100,000. This was likely due to fatigue from the rapid price increase and the depletion of positive news. During the weekend when the US market was closed, trading volume was not high, but it briefly reached $103,000.
As mentioned in last week's weekly briefing, the biggest issue was the Microsoft shareholder meeting. They voted on whether to include Bitcoin as an investment for Microsoft, and with BlackRock, Microsoft's second-largest shareholder, leading the Bitcoin ETF frenzy, there were high expectations, but it was ultimately rejected. On that day, the price of Bitcoin plummeted, briefly reaching $94,000. It was later revealed that the votes in favor of Bitcoin investment were only 0.55% of the total.
Is it still difficult for major tech companies to hold Bitcoin? Not necessarily. While Microsoft's proposal failed, Amazon is also discussing converting a portion of its cash holdings to Bitcoin as a hedge against inflation.
Companies are increasingly following in the footsteps of Nasdaq-listed MicroStrategy (MSTR), which has significantly increased its stock price by issuing convertible bonds to purchase Bitcoin. MSTR announced that it purchased $1.5 billion worth of Bitcoin in early December. They have now accumulated about $15 billion worth of Bitcoin and are expected to join the Nasdaq 100 soon.
This week, the Bitcoin mining company Riot Platform issued convertible bonds to purchase $500 million worth of Bitcoin. Another mining company, Marathon Digital, also purchased $110 million worth of Bitcoin using convertible bond proceeds.
Bitcoin has formed a new trading range between $90,000 and $103,000 since December. With the new all-time high at $104,000, it is unlikely to easily break out of this range without significant positive news in the short term.
On-chain data analysts point to Bitcoin whale investors realizing profits as one of the reasons for the trading range. Bitcoin has risen more than 40% since Trump's election, and there has been significant wallet turnover among whales holding over 1,000 BTC in recent weeks. This turnover needs to be completed before a sharp rally can occur.
While Bitcoin is temporarily unstable around the $100,000 level, the long-term outlook remains bright according to professional research. VanEck forecasts Bitcoin to reach $180,000 next year, and Bitwise expects Bitcoin to reach $200,000 by the end of 2025, with Ethereum and Solana also easily reaching new highs.
BlackRock recently recommended actively including Bitcoin at around 2% in a portfolio of 60% stocks and 40% bonds, as Bitcoin can effectively hedge various risks and improve overall returns.
The Goldman Sachs CEO hinted that clearer regulatory guidelines from the US government are needed for companies and financial institutions to actively purchase cryptocurrencies like Bitcoin and Ethereum. Goldman Sachs currently only holds $718 million worth of Bitcoin ETFs, not direct Bitcoin holdings.
Slowly rising prices... What is the Fed's monetary policy direction for next year?
The FOMC meeting is scheduled for the early morning of Thursday, the 19th. The direction is already somewhat set. According to the FedWatch data from the CME Group, the probability of the Fed raising rates by 25bp is around 96%.
In such cases, the FOMC result is usually already priced into asset prices. More important will be the Fed's dot plot on the policy direction for next year, and what Fed Chair Jerome Powell says at the press conference after the official announcement.
The US Personal Consumption Expenditures (PCE) price index release on the 20th is also crucial, as the recent US Consumer Price Index (CPI) has been trending upwards. If the Fed's preferred inflation gauge, the PCE, also shows signs of re-acceleration, the Fed may not pursue an accommodative monetary policy in early 2023, which could dampen the year-end sentiment in the cryptocurrency market.
I wish all readers successful investments this week.
