Last week, BTC showed an "M-shaped" top reversal trend with significant price fluctuations. Although there were multiple instances of sharp rises and falls, there was still some buying support at lower levels. From December 25 to 26, BTC surged to $100,000 twice, with a notable peak at $99,963.7. Subsequently, BTC's price oscillated within a downward channel, repeatedly finding support around $91,530.45, forming a long-term key support level. Bulls attempted to resist, but the overall trend remained downward with increasing volume, while rebounds occurred on decreasing volume, indicating that the market is still dominated by bears. The current price of BTC is $94,540.02 (data sourced from Binance spot, December 31, 16:30).
Since Trump's election, the inflow of funds into the spot ETH ETF has significantly increased, even surpassing the growth trend of the BTC spot ETF during the same period. Last week, the spot BTC ETF saw a net outflow of $388 million, while the spot ETH ETF had a net inflow of $349 million. With Trump set to take office in January, this may further propel ETH to become the best-performing mainstream token in the next quarter.
Market Interpretation
Surge in South Korean cryptocurrency investors, with the depreciation of the won driving premium trading
On December 28, CryptoQuant CEO Ki Young Ju pointed out that the won's 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 through exchanges like Upbit to avoid exchange rate risks.
As of November, the number of cryptocurrency investors in South Korea exceeded 15.59 million, accounting for over 30% of the total population. This growth is closely related to Trump's commitment to support the cryptocurrency industry after being elected president, while the rise in BTC prices further fueled this trend. The total cryptocurrency holdings of South Korean investors reached 102.6 trillion won (approximately $70.8 billion), a significant increase from October.
With increasing interest from South Korean investors in cryptocurrencies and rising exchange rate risks, premium trading in the crypto market has become more pronounced, with heightened demand for safe-haven assets like BTC and USDT.
US debt ceiling crisis may trigger BTC downside risk
On December 30, US Treasury Secretary Yellen warned that the debt ceiling would be reached in mid-January 2025, leading to rising risk aversion in global markets. She stated that the Treasury would take "extraordinary measures" to cut borrowing after the ceiling is hit, while urging Congress to act swiftly to maintain US credit. This news triggered volatility in risk assets, with major US stock indices falling about 1%, and BTC also dropping 4% from its intraday high.
Additionally, the debt issue in the macro context is a core variable. Since the US established a 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.
Acceleration of institutional BTC adoption in 2024, KULR Technology purchases 217.18 BTC for $21 million
Since the US approved the spot BTC ETF, more companies have begun to include BTC in their asset reserve plans, making BTC a mainstream asset. This year, BTC has risen nearly 130%, approaching the psychological threshold of $100,000. In January, ETF net inflows 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 to join is KULR Technology, which produces energy storage products for the aerospace industry, purchasing 217.18 BTC for $21 million and planning to invest up to 90% of its surplus cash in BTC. Meanwhile, Bitwise has submitted an application for a BTC standard company ETF, which will track stocks of companies holding over 1,000 BTC. Strive Asset Management has submitted a BTC bond ETF, providing exposure through holding corporate bonds targeting BTC, further promoting the diversification of BTC investments.
With continued institutional participation, the mainstreaming of crypto assets is rapidly developing, and BTC is seen as a long-term investment tool for hedging against inflation and geopolitical risks.
Trump to be inaugurated on January 20, expected to issue at least 25 executive orders
After Trump's successful presidential campaign in early November, the market experienced a month-long rally. Trump has presented a crypto-friendly stance, and many of his nominated department heads are also pro-crypto market figures. The SEC chairman, who has faced criticism, is also set to leave, leading to a generally optimistic outlook for the future of the crypto market.
According to data from Coinbase, the new incoming legislators are significantly more supportive of crypto compared to the previous session. Michael Rosen, Chief Investment Officer of Angeles Investments, stated, "Trump's inauguration may also bring some surprises to the market, and he is expected to issue at least 25 executive orders on his first day in office, covering a range of issues from immigration to energy and cryptocurrency policy."
Market Highlights
FTX to begin first round of cash debt repayments, compensation inflow indirectly reduces selling pressure in the market
On December 17, FTX and its affiliated debtors announced that the court-approved Chapter 11 restructuring plan will officially take effect on January 3, 2025. The first round of distributions will start within 60 days after the effective date, targeting only the approved creditors in the Convenience Classes. FTX has reached agreements with cryptocurrency custodians BitGo and trading platform Kraken to provide asset distribution services for retail and institutional clients.
According to data disclosed by HODL15Capital, the first round of repayment distribution, effective on January 3, includes $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 likelihood of some compensation funds flowing back into crypto, thereby boosting market sentiment.
Tether clarifies rumors of USDT being deemed illegal in Europe
Recently, there have been rumors that USDT will be deemed illegal in Europe on December 30, 2024, raising concerns in the market. In response, Tether CEO Paolo Ardoino took to social media platform X on December 29 to clarify this news, calling it "FUD information," and explicitly stated that USDT will not lose its legality on the aforementioned date or in the short term.
According to the EU's Markets in Crypto-Assets Regulation (MiCA), stablecoin issuers must comply with specific regulations, but the regulation provides a transition period of 6 to 18 months, meaning that USDT's legal status is currently not under threat. Additionally, 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 noting that although MiCA requires stablecoin operators to hold over 30% of liquidity in banks, Tether has expressed reservations about this rule, believing it may adversely affect the liquidity management of stablecoins. However, to date, Tether has not encountered any financial issues or legal violations, and its market position remains stable.
Trump's presidency boosts surge in crypto OTC trading volume
Recently, several cryptocurrency trading firms reported a rapid increase in OTC trading volume in recent months, with Trump's election being a key driving force. Tim Ogilvie from Kraken exchange stated that OTC trading volume has increased by 220% year-on-year. Traders noted that market participants are actively preparing and initiating trades as the election approaches. The prices of mainstream coins like BTC and ETH have risen, prompting projects and investors to manage funds and risks within the new price range. BitGo also pointed out that the election results are the dominant factor behind the recent surge in trading volume, with some companies' trading volumes returning to levels seen during the market peak in 2021.
US, UK, and EU strengthen cryptocurrency tax regulation, investors need to pay attention to tax rates and compliance requirements
The US, UK, and EU are strengthening tax regulations on cryptocurrencies, affecting investor operations. In the US, cryptocurrency transactions are subject to capital gains tax, with rates based on holding time and income; miners and staking income are subject to income tax, and exchanges will need to report data starting in 2025. The UK imposes a maximum capital gains tax of 24% on crypto asset transactions, with an exemption threshold of £3,000; miners and salary income are subject to income tax and national insurance contributions. EU countries have different tax rates, with Germany exempting taxes for holdings over one year, while Spain's rate reaches 28%. The MiCA regulation will unify some rules in 2025, enhancing tax transparency.
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