Exclusive Market Analysis of Cryptocurrency | December 29

Author: Monk Observing Trends

On the macro front, the Federal Reserve's current interest rate hike cycle has been underway for nearly two years, and most people believe that the market will experience a severe crash. However, let's take a look at the actual situation (see the chart below). The S&P 500 index and the Nasdaq 100 index are currently close to historical highs, and single-family home prices in the U.S. have been rising every month for the past nine months, despite interest rates still being above 5%. In such a significant economic context, the Federal Reserve is expected to start cutting interest rates in the first half of next year, and I anticipate that by the end of next year or the year after, the Fed will initiate comprehensive quantitative easing, injecting a large amount of money into the capital markets. It is foreseeable that 2024 will likely be a year of capital frenzy, and Bitcoin is likely to be the best-performing asset among all asset classes.

At 4 PM this afternoon, the largest options settlement in Bitcoin's history will occur; BTC options worth $7.56 billion and ETH options worth $3.47 billion will settle on Deribit. Based on this year's patterns, the market tends to be relatively calm before large options settlements. Bitcoin's major pain point is at $33,000, which no longer affects the price direction, and market volatility may occur after the options settlement is completed.

ARK 21Shares has submitted its fifth revision for a Bitcoin spot ETF to the SEC. Recently, several large institutions submitted their final revised versions of ETF products to the SEC before the deadline on the 29th, gearing up for approval. If all goes well, we may receive the final results regarding the spot ETF approval as early as next week.

To add one more point about the Bitcoin spot ETF, Grayscale seems to have ultimately compromised with the SEC by converting GBTC into a cash Bitcoin ETF. This is a stripped-down version of an ETF; even if approved, its impact on the Bitcoin market will be minimal because all subscriptions and redemptions are in cash. If the Bitcoin ETF is created in cash, it will merely be a tool tracking BTC prices without acquiring actual BTC. This situation will have a negligible impact on the crypto space. The current information indicates that nearly all institutions are applying for a spot ETF rather than a cash ETF.

Bitfinex has released its 2024 special outlook report: the total market capitalization of the crypto market is expected to rise from the current $1.6 trillion to $3.2 trillion; the number of global cryptocurrency users will increase from the current 575 million to between 850 million and 950 million; institutional investors are increasing their investments in crypto assets, with the spot Bitcoin ETF being a catalyst; 2024 is a Bitcoin halving year, and miner activity will significantly impact the market. The predictions in this report are relatively conservative, with expectations for market capitalization only doubling. However, being conservative isn't a bad thing; lowering expectations might lead to greater surprises.

After its launch, ORDS performed quite well. It was initially hit by early investment institutions, but then market makers stabilized the price around $0.03. After digesting external selling pressure, it has now risen to around $0.06 without trapping investors, unlike RDEX.

The price of NOSTR has also stabilized. Yesterday, the Nostrassets platform offered 200,000 U of NOSTR tokens to the Damus project, which was rejected and labeled as a scam by Damus. Damus is indeed one of the earliest developers of the NOSTR Lightning Network, but it lost the naming battle to the Nostrassets platform during this wave of inscriptions. This incident has had little impact on the NOSTR price. Today, the platform also underwent updates and maintenance, adding a section to display price trends, indicating steady development.

In terms of market conditions, Bitcoin is gradually completing its consolidation structure, and the price is stabilizing. The small-scale bottoms are gradually rising, and there hasn't been a significant supply increase. Once demand re-enters the market, it is likely to break upwards. Recently, Bitcoin's volatility has been low, and the trend has been relatively flat, which is related to U.S. institutions being on holiday and the impending ETF approval. Additionally, the largest Bitcoin options settlement in history will occur at 4 PM today, undoubtedly increasing the cautious sentiment among investors. Actionable decisions should wait for market performance post-ETF approval, and positions should be maintained.

ETH is correlated; although it has experienced a surge followed by a pullback, it has not deteriorated, nor has there been a corresponding supply increase. After the market adjustment ends, the likelihood of continued upward movement is high.

In the altcoin space, Sats has performed well, with its adjustment pattern gradually easing and supply showing signs of decline, making it a candidate for participation. MEME has returned to the support zone, with the current support around 2.5 being effective, but future movements will depend on Bitcoin's performance; overall, it remains correlated. The market has shown poor profit-taking effects in recent days, especially with deep pullbacks in previously high-performing altcoins. Caution is advised when participating in the market, and one should avoid chasing highs.

The fear index is at 65, having decreased somewhat, indicating a cooling market, which is a good sign.