Wall Street started the new week with a price increase during the holiday period, pushing the S&P 500 up 0.73%. The Dow Jones Industrial Average Index rose modestly by 0.16% after initial losses, and the Nasdaq Composite surged 0.98%, driven by large companies like Nvidia, Tesla, and Meta Platforms.
However, the crypto market is telling a different story. Bitcoin is currently struggling, trading at $96,202 as of the time of writing, about $13,000 lower than the ATH set on 17/12.
MicroStrategy, the "supreme Bitcoin maximalist", has suffered a heavy blow. The company's stock plunged 8.8% on Monday, a rocky start in the Nasdaq-100 index. With a company that relies on the Bitcoin price, this is not entirely surprising.
Despite the Monday decline, MicroStrategy still marked a prosperous year. The company's stock has risen 426% in 2024, making MicroStrategy one of the most prominent tech companies in the US with a value exceeding $5 billion. All this success came from the bold Bitcoin bet.
The company began accumulating the leading cryptocurrency by market cap in 2020, and its current holdings are now nearly $43 billion. Accordingly, MicroStrategy's market value has increased from $1.1 billion to $82 billion.
But the problem is that this value only exists as long as Bitcoin remains in favor. So what if Bitcoin declines? MicroStrategy will become even more tragic. The Monday plunge is a clear warning. Bitcoin has slipped below the 50-day moving average, an important level for traders.
What is weighing on Bitcoin? First, the US Federal Reserve may slow the pace of interest rate cuts in 2025. This makes investors more cautious about risky investments, and Bitcoin, whether it likes it or not, is still a symbol of speculation. Even with US President-elect Donald Trump's pledge to loosen crypto regulations, the market has not yet truly trusted and stabilized.
Trump's victory has ignited the Bitcoin fire. Prices have surged 40% since Election Day, with traders betting big on his pro-crypto speech. He has appointed a pro-crypto Chair of the US Securities and Exchange Commission (SEC), US Treasury Secretary, and Internal Revenue Service Commissioner, and even established a Crypto Czar Council at the White House.
Meanwhile, Bitcoin ETFs have also seen a flood of inflows since Trump's election win. Over $12 billion has flowed into these funds, but the euphoric sentiment is starting to cool. On 19/12, the products recorded their largest one-day outflow in months, indicating that some investors are taking a break.
But MicroStrategy is not slowing down. The company has just announced another $561 million Bitcoin purchase, marking its seventh consecutive week of buying.
Meanwhile, the broader crypto market is reflecting the ups and downs of Bitcoin. ETH and DOGE have both doubled in value this year, but they are still trailing Bitcoin - up 125% since the start of the year.
Thin trading volume could add to the volatility this week. The US market will close early today and be closed for Christmas on Wednesday, so there will be fewer traders to stabilize the situation.
Disclaimer: This article is for informational purposes only and not investment advice. Investors should do their own research before making decisions. We are not responsible for your investment decisions.
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Dinh Dinh
According to Cryptopolitan
