Bitcoin could be on the verge of a bullish run in the coming weeks and beyond, thanks to shifting macroeconomic dynamics.
Popular trader Crypto Ed, the founder of CryptoTA trading group, recently noted a potential decline in the strength of the United States dollar (USD), which historically has had an inverse relationship with Bitcoin.
Recent changes in U.S. macroeconomic policy are expected to bolster Bitcoin’s prospects while exerting downward pressure on the USD.
Analysts have been optimistic about the cryptocurrency market’s performance in 2024, citing a combination of favorable macroeconomic data and encouraging signals from the Federal Reserve.
The decline in inflation is seen as a factor that could allow the Federal Reserve to reconsider its stance on interest rate hikes, leading to increased liquidity in the markets, particularly benefiting risk assets like Bitcoin.
Unfortunately, the USD is not set to benefit from this shift and has experienced a significant drop this week due to the impact of monetary tightening on inflation.
The U.S. Dollar Index (DXY) has fallen over 2% since the beginning of the week, currently hovering below $102, marking its lowest level since mid-August.
Crypto Ed shared his optimism for Bitcoin’s long-term outlook, anticipating that a weakening DXY could propel Bitcoin to new all-time highs, possibly reaching $92 for DXY.
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In a chart analysis, key levels to watch on the DXY in three-day timeframes were highlighted.
Economist Lyn Alden offered her perspective on the liquidity situation, noting that while global liquidity indicators had experienced some stagnation, a recent dovish stance by the Federal Reserve and the drop in the DXY might provide a boost to liquidity.
Alden also highlighted a market repricing scenario, with markets starting to factor in the possibility of the Federal Reserve lowering interest rates in 2024.
Data from the Federal Reserve itself revealed an increase in its balance sheet for the first time since August, rising by approximately $2 billion in December.
As of December 15th, BTC/USD was trading at $42,700, showing relative stability after a brief period of volatility the previous day.
Bitcoin had posted a 13% gain for December, according to data from Cointelegraph Markets Pro and TradingView.
With a weakening dollar and changing macroeconomic factors, Bitcoin enthusiasts are hopeful for new all-time highs in the near future.
United States Securities and Exchange Commission (SEC) Chair Gary Gensler has suggested a potential shift in the regulator’s approach to Bitcoin exchange-traded products (ETPs) following a recent legal decision involving Grayscale.
During an interview with CNBC on December 14, Gensler addressed the numerous pending applications for spot Bitcoin exchange-traded funds (ETFs, revealing that the SEC is currently processing “between eight and a dozen filings.”
Gensler acknowledged that the SEC had previously rejected several of these applications but indicated a potential change in their stance, stating, “So we’re taking a new look at this based upon those court rulings.”
When asked directly if he was referring to Grayscale, Gensler avoided providing a specific answer, emphasizing that the SEC operates within the framework of laws enacted by Congress and how the courts interpret them.
The SEC’s decision to deny an ETF offering from Grayscale Investments, involving its Bitcoin trust, was overturned by a federal judge in August.
Subsequently, major asset management firms like BlackRock, Fidelity, Grayscale, Invesco, Galaxy, VanEck, and Valkyrie have entered the race to launch spot Bitcoin ETFs.
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Although these applications have faced delays, some analysts anticipate a potential batch approval in early January 2024.
In another interview with Bloomberg’s Kailey Leinz on the same day, Gensler avoided disclosing the number of spot Bitcoin product filings.
Instead, he highlighted recent developments in the U.S. treasury market as the agency’s current priority.
U.S. Representative Bryan Steil commented on Twitter, criticizing Gensler’s handling of the crypto-related questions:
“Chair Gary Gensler obfuscates on crypto with the press like he does at committee hearings. He does not want to explain his agency’s aggressive regulatory approach which is pushing crypto offshore.”
Bloomberg ETF analyst James Seyffart also remarked, “Gensler very rarely gives clear answers! He’s a master at hedging his words.”
In summary, SEC Chair Gary Gensler’s recent comments have raised speculation about a potential shift in the SEC’s approach to Bitcoin exchange-traded products, following recent court decisions.
This comes as several major asset managers seek approval for spot Bitcoin ETFs, though the regulatory landscape remains uncertain.
As Bitcoin exchange-traded fund (ETF) issuers work on their filings with the United States Securities and Exchange Commission (SEC), the regulator is standing firm in its demand for a “cash” redemption model instead of alternatives proposed by issuers like BlackRock.
On December 14, finance lawyer Scott Johnsson revealed that ETF applicants Invesco and Galaxy have now adopted a cash creation and redemption model for their ETFs.
Their updated S-1 filing with the SEC stated, “The trust expects that creation and redemption transactions will take place initially in cash.”
The SEC has been advocating for a cash redemption model for spot Bitcoin ETFs, while some applicants, including BlackRock, have suggested an “in-kind” model.
So, what’s the difference? A cash creation model involves authorized participants depositing cash equivalent to the net asset value of the creation units.
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The fund uses this cash to purchase the underlying asset, such as Bitcoin. In contrast, the in-kind creation model involves participants depositing a basket of securities that match the ETF’s portfolio, allowing the fund to issue creation units without immediately selling the securities for cash.
The cash model may result in slightly wider spreads and potential tax inefficiencies but offers greater flexibility for fund participants.
Bloomberg senior ETF analyst Eric Balchunas believes the latest filing indicates the SEC’s determination to allow only cash-created ETFs initially.
He mentioned that many were waiting to see if BlackRock could persuade the regulator to consider in-kind creation, but analyst Seyffart suggests that most issuers may eventually adopt the cash creation and redemption model.
In late November, BlackRock met with the SEC to discuss ETF share creation and redemption mechanisms, presenting a revised hybrid in-kind model that favored this method over cash creations.
Bitwise has also shifted towards cash-only creation and redemption since December 4, despite initially having both in-kind and cash options in their documents.
The SEC recently delayed its decision on approving a spot Ether ETF for Invesco and Galaxy Digital.
Representatives from asset managers like BlackRock, Grayscale, and Fidelity have been meeting with the SEC to finalize details for their spot BTC products, with analysts anticipating batch approvals in early January.
Bitcoin is on the verge of reaching an unprecedented milestone, as Bitwise, a senior research analyst, predicts that the cryptocurrency will achieve a new all-time high of $80,000 in 2024.
This bullish projection is part of a larger set of predictions for the crypto industry in 2024, as outlined by Bitwise’s Ryan Rasmussen in a post on X (formerly Twitter) on December 13.
One of the standout trends in these predictions is the remarkable growth of the stablecoin industry. Bitwise anticipates that stablecoins will soon surpass Visa’s payment volume, recognizing these dollar and asset-pegged tokens as one of crypto’s most significant innovations.
By the third quarter of 2023, Visa had processed over $9 trillion in payments, while stablecoin trading volume had already exceeded $5 trillion.
Rasmussen highlighted the remarkable rise of stablecoins, with their market capitalization growing from nearly nothing to a staggering $137 billion within just four years.
Given this trajectory, he expects stablecoins in 2024 to continue expanding in both trading volume and utility.
Bitwise’s optimism regarding stablecoins is not unique, as Circle CEO Jeremy Allaire also expressed confidence in their growing demand.
Allaire noted the increasing appetite for internet-enabled digital dollars, emphasizing the need for such a secure and accessible digital currency.
Furthermore, asset manager Van Eck predicts that the total stablecoin market capitalization will reach $200 billion by the end of 2024.
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Rasmussen also foresees a prosperous year ahead for Bitcoin, projecting a price exceeding $80,000 in 2024.
He attributes this optimism to the anticipated launch of the first spot Bitcoin exchange-traded fund (ETF) and the upcoming halving event in April, both of which are expected to drive significant price growth.
However, Bitcoin price predictions for 2024 vary widely among analysts and experts.
Some anticipate an average price of at least $100,000, while others set targets as high as $250,000 or even $1 million.
Bitwise speculates that not only will the spot Bitcoin ETF be approved, but its launch will be the most successful ETF launch in history, amassing $72 billion in assets under management within the next five years.
Bitwise is among 13 financial institutions seeking approval for a spot Bitcoin ETF from the United States Securities and Exchange Commission.
In addition to Bitcoin, Ethereum is poised for substantial improvements in 2024, with Bitwise expecting a 100% increase in revenue to $5 billion.
This prediction hinges on the EIP-4484 upgrade, which could reduce gas costs on the Ethereum network to below $0.01.
Beyond crypto assets, Coinbase is predicted to thrive during the anticipated bull market of 2024, with Bitwise forecasting a remarkable 100% growth in revenue for the exchange platform, surpassing Wall Street’s expectations tenfold.
Bitcoin is showing promising signs of a new bull run, with daily gains of 7% driving its price higher. This surge in price follows a brief sell-off, and on-chain metrics suggest that the upward momentum may continue.
After reaching $44,000 earlier in the month, Bitcoin experienced a cooling-off period, dropping to nearly $40,000. However, conditions have since improved.
Philip Swift, the creator of Look Into Bitcoin, pointed out on December 13 that profit-taking has increased as BTC/USD reached its highest levels in 19 months.
He highlighted the “Value Days Destroyed” (VDD) metric, which measures Bitcoin selling activity based on the age of the coins being sold and the current BTC price.
On December 11, VDD reached its highest level since May 2021, indicating that some long-term holders (HODL’ers) are taking profits.
Recent selling activity has been driven by short-term holders (STHs), who are typically more speculative in their trading approach.
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Meanwhile, analysts see potential for Bitcoin’s price to continue rising towards the key resistance level around $50,000.
Matthew Hyland, an analyst, pointed to the relative strength index (RSI) on daily timeframes, which has displayed a bullish divergence with price, indicating potential upward movement.
Additionally, there is a notable influx of capital into both Bitcoin and Ethereum, reminiscent of late 2020 when Bitcoin first broke the $20,000 mark and entered a phase of price discovery.
This renewed interest from investors suggests confidence in the cryptocurrency market.
Social media commentator Ali expressed optimism about the current market conditions, echoing the sentiment that significant capital inflows are returning to both Bitcoin and Ethereum.
Others share this bullish outlook, with BitQuant emphasizing that Bitcoin could break through the $42,000 to $45,000 channel by the end of the coming week, with no strong resistances in sight until the $63,000 mark.
In summary, Bitcoin is showing signs of a robust bull run, with on-chain metrics, profit-taking, and increased capital inflows contributing to its recent price surge.
Analysts and commentators are optimistic about the cryptocurrency’s potential to continue its upward trajectory, with key resistance levels in focus as Bitcoin aims for new all-time highs.
Wikipedia co-founder Jimmy Wales stirred up controversy when he took to X (formerly Twitter) on December 11 to mock Bitcoin, proudly stating that he has never lost money due to forgetting his bank password, unlike some Bitcoin users who have lost access to their wallets.
However, his comments did not sit well with the broader Bitcoin and cryptocurrency community, who swiftly responded to his remarks.
In his sarcastic X post, Wales facetiously claimed to have forgotten his bank password and subsequently lost all his cash.
He then proceeded to taunt the Bitcoin community, asserting that this scenario would never happen with banks because they function reliably, unlike Bitcoin.
Wales’ remarks were met with criticism from the Bitcoin community, who reminded him that while traditional banks may indeed be reliable for some, they are not accessible to everyone worldwide.
Alex Gladstein, the Chief Strategy Officer at the Human Rights Foundation, highlighted that banks primarily function effectively in countries with a strong rule of law and stable currencies, and only about one billion people out of the world’s eight billion population have access to banking services.
Lyn Alden, founder of Lyn Alden Investment Strategy, emphasized that even those with bank accounts are not immune to financial hardships.
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She cited the example of a Lebanese doctor who lost 95% of their savings due to hyperinflation, highlighting the vulnerability of traditional financial systems.
Bitcoin proponents, including Samson Mow, seized the opportunity to point out the irony of Wales’ comments, given Wikipedia’s dependence on donations to sustain its operations.
Mow suggested that if Wikipedia had invested in Bitcoin as he had recommended a few years ago, they might not have to rely on continuous fundraising.
Some in the Bitcoin community drew attention to the centralized nature of the banking system, reiterating that it does not cater to the needs of everyone.
Danny Scott, CEO of Bitcoin exchange Coin Corner, argued that Wales was comparing two different scenarios and likened the situation more to a user forgetting their password for a Bitcoin exchange, which can be reset, rather than a true loss of funds.
He emphasized that losing physical cash, just like Bitcoin, results in irreversible loss.
BlackRock has made a significant alteration to its Bitcoin exchange-traded fund (ETF) application, aiming to facilitate participation by major Wall Street banks.
This change involves the creation of new fund shares using cash, rather than relying solely on cryptocurrency assets.
The innovative “in-kind redemption prepay” model is designed to enable banking giants like JPMorgan and Goldman Sachs to become authorized participants in the fund.
This would allow them to bypass restrictions that currently prohibit them from directly holding Bitcoin or other cryptocurrencies on their balance sheets.
This transformative model was presented jointly by six members of BlackRock and three from Nasdaq during a meeting held on November 28th with the United States Securities and Exchange Commission (SEC).
If granted approval, this development could prove to be a game-changer for Wall Street institutions with trillion-dollar balance sheets, as it opens up a new avenue for their involvement.
Many highly regulated banks are presently barred from directly holding cryptocurrencies.
Under the revised model, authorized participants (APs) would transfer cash to a broker-dealer, which would then convert it into Bitcoin before entrusting it to the ETF’s custody provider, Coinbase Custody in BlackRock’s case.
This arrangement also effectively shifts risk away from APs and places it more in the hands of market makers.
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Furthermore, BlackRock asserts that this new model enhances resistance to market manipulation, which has previously been a key factor in the SEC’s rejection of spot Bitcoin ETF applications.
Additionally, BlackRock contends that the new ETF structure will bolster investor protections, reduce transaction costs, and promote simplicity and consistency within the broader Bitcoin ETF ecosystem.
According to a filing with the SEC, BlackRock had its third meeting with the SEC, led by Gary Gensler, on December 11.
Notably, this meeting on November 28 with the SEC was a follow-up to an initial meeting held on November 20, where BlackRock introduced its original in-kind redemption model.
The SEC is obligated to make a decision on BlackRock’s application by January 15, with the final deadline set for March 15.
In the meantime, ETF analysts anticipate that the SEC will issue decisions on several pending spot Bitcoin ETF applications sometime between January 5 and 10.
Grayscale, Bitwise, VanEck, WisdomTree, Invesco Galaxy, Fidelity, and Hashdex are among the other financial firms eagerly awaiting the SEC’s decisions during this period.
Bitcoin’s price has remained below its 2023 high, indicating that the $44,000 resistance level has proven stronger than initially anticipated by investors.
Despite trading below $42,000, there is still potential for Bitcoin to reach $50,000 and beyond. In fact, signs suggest that this may be more likely than not.
A closer look at Bitcoin derivatives metrics reveals that traders have remained optimistic, even after a 6.9% drop.
However, the question remains: is this optimism justified for further gains?
On December 11, a significant $127 million liquidation of leveraged long Bitcoin futures occurred.
While this may seem substantial, it accounts for less than 1% of the total open interest, which encompasses the value of all outstanding contracts. Nevertheless, this liquidation triggered a 7% correction in less than 20 minutes.
Some argue that derivatives markets played a key role in this negative price movement, but it’s important to note that Bitcoin’s price rebounded by 4.2% in the following six trading hours after hitting a low of $40,200 on December 11.
This suggests that the impact of forceful liquidation orders had dissipated, disproving the idea of a crash solely driven by futures markets.
To assess whether Bitcoin whales and market makers remain bullish, traders can analyze the Bitcoin futures premium, also known as the basis rate.
In stable markets, these contracts typically trade at a premium of 5% to 10% due to their extended settlement period.
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Data shows that despite the 9% intraday price drop on December 11, the BTC futures premium remained above the 10% neutral-to-bullish threshold throughout.
This indicates that there was no significant excess demand for shorts, as the metric did not drop into the neutral 5% to 10% range.
Examining options markets is another way to gauge investor sentiment. The 25% delta skew is a useful indicator that reflects whether arbitrage desks and market makers are charging excessively for upside or downside protection.
The BTC options skew has remained neutral since December 5, signaling balanced costs for both call and put options, showing resilience even after the 6.1% correction since December 10.
Furthermore, data on perpetual contracts, which include an embedded rate recalculated every eight hours, reveals a modest increase in the positive funding rate between December 8 and December 10.
This suggests increased demand for leverage among long positions, but the increase is not significant enough to burden most traders.
Overall, the recent rally to $44,700 and subsequent correction to $41,300 appear to have been primarily driven by the spot market.
This development reduces the likelihood of cascading liquidations due to excessive optimism related to the expectation of a spot exchange-traded fund (ETF) approval.
In summary, Bitcoin bulls can take comfort in the fact that derivatives metrics indicate that positive momentum has not waned despite the price correction.
Bitcoin speculators rushed to sell their holdings as the BTC price experienced a correction towards the $40,000 mark, according to the latest on-chain data.
On December 12th, figures from on-chain analytics firm Glassnode revealed that short-term holders (STHs), defined as entities holding BTC for 155 days or less, collectively offloaded over $2 billion worth of BTC.
This came as Bitcoin witnessed its most significant single-day drop of 2023, reaching a peak decline of 8.1%. The data was confirmed by Cointelegraph Markets Pro and TradingView.
Responding to the price drop, the more speculative segment of Bitcoin investors began reducing their exposure to the market, displaying signs of uncertainty about its future.
Glassnode’s data disclosed that on December 11th, STHs sent $1.93 billion worth of Bitcoin to exchanges, followed by another $2.08 billion on the subsequent day.
Both of these days marked record highs in terms of selling pressure from STHs, with entities in both profit and loss positions contributing to the trend.
The last time single-day selling exceeded the $2 billion threshold was in June 2022, triggered by concerns over the impending collapse of blockchain firm Celsius.
James Van Straten, a research and data analyst at crypto insights firm CryptoSlate, highlighted the significance of the week’s STH movements, noting that $2 billion was sold in total, with $1.1 billion resulting in losses.
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This mainly impacted retail investors who had bought Bitcoin between December 6th and December 13th, likely due to the allure of Bitcoin’s 150% year-to-date gain.
While the trading volumes in BTC terms were less substantial, the December 12th figures marked the largest since the beginning of July when BTC/USD had just rebounded above the $30,000 level after dipping to $25,000.
Glassnode also pointed to various on-chain indicators suggesting that STHs might be growing wary of the bullish trend.
Profit-taking was noted around the month’s 19-month high near $45,000, and the researchers suggested that there might be a potential saturation of demand or exhaustion in play.
One of the key indicators highlighted was the Mayer Multiple, which gauges the relationship between the current spot price and the 200-week moving average.
The Mayer Multiple was approaching 1.5, a level that has historically acted as resistance during Bitcoin’s bull markets.
Glassnode stated that the current Mayer Multiple of 1.47 is close to the ~1.5 level, which has historically acted as resistance in previous cycles, including the November 2021 all-time high.
This level has not been breached for 33.5 months, the longest period since the 2013-2016 bear market.
Bitcoin’s price experienced a 5% dip within the last 24 hours, settling at $41,645 on December 11.
However, despite this sudden correction, technical indicators and on-chain data suggest that Bitcoin remains robust, as bulls actively work to push the price back above the $44,000 mark.
On-chain data indicates that Bitcoin’s price had become “over-extended.” It plummeted by as much as 7.2%, reaching $40,300 on Coinbase, which led to discussions among analysts.
Julio Moreno, head of research at CryptoQuant, an on-chain analytics firm, pointed out that Bitcoin’s price had become “overheated” following its recent surge above the psychologically significant $40,000 level.
Further data from the on-chain data analysis firm Lookintobitcoin revealed signs of exhaustion among bullish investors.
According to their December 2023 report, Bitcoin’s price had reached its near-term target as per the golden ratio multiplier, a metric based on the Crosby Ratio.
This highlighted that Bitcoin’s near-term price had become “over-extended,” necessitating a correction or at least a slowdown.
In essence, Bitcoin had entered overbought conditions above $40,000, with its relative strength index (RSI) indicating overbought status since December 5.
This early warning signaled a potential reduction in buying pressure as traders began to perceive the rally’s loss of momentum and took profits.
The primary challenge for Bitcoin’s price remains the formidable resistance at the $44,000 supply zone.
The Lookintobitcoin golden ratio multiplier indicator indicated that the 1.6 multiplier target had been reached around this area. Bitcoin has struggled to convincingly breach this level over the past week, facing significant rejection.
The intensity of the resistance at $44,000 is underscored by on-chain data from IntoTheBlock’s “in/out of the money around price” (IOMAP) model.
This data indicates that the $43,346–$44,627 price range is where approximately 585.77 BTC was previously acquired by approximately 1.43 million addresses.
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Any attempts to surpass this level would likely encounter aggressive selling from this group of sellers.
Nonetheless, this ongoing correction may be viewed as a bear trap within an overall bullish trend that has developed over recent months.
Data from crypto market intelligence firm Santiment indicates that Bitcoin’s exchange outflows are on the rise, with the BTC exchange flow balance now at -347.
This negative reading implies that outflows are surpassing inflows, a sign that investors are more inclined to hold than sell, which is generally considered bullish.
From a technical perspective, Bitcoin has remained above all major moving averages, and these indicators have continued their upward trajectories, providing strong support levels.
The moving average convergence divergence (MACD) indicator also remains in positive territory, with the MACD line positioned above the signal line, favoring further upward movement in Bitcoin’s price.
Therefore, it is likely that Bitcoin’s price will continue to rise from its current levels, with buyers targeting a breakout above $44,000.
A successful break beyond this level could propel Bitcoin toward the psychological milestone of $50,000, either in early 2024 when the United States Securities and Exchange Commission is expected to decide on spot Bitcoin exchange-traded fund applications or during the next Bitcoin halving event.