Bitcoin breaks the $40,000 mark, the ‘Christmas effect’ is coming, how will the market perform?

Bitcoin Surpasses $40,000 Milestone, Anticipation of 'Christmas Effect' Rises - What's Next for the Market?

Author: Nancy, LianGuaiNews

Under the multiple factors of the potential approval of spot ETFs, halving narratives, and the heating up of interest rate expectations, the price of bitcoin has surpassed $40,000 for the first time this year, further fueling optimistic sentiment about the long-term prospects in the cryptocurrency market. However, at the same time, concerns about short-term corrections are intensifying as Christmas approaches.

Bitcoin Returns to Top 10 Global Asset Market Value, Multiple Institutions Make Optimistic Predictions

According to CoinGecko data, as of December 4th, the price of bitcoin has risen to $41,000, with a daily increase of 4.6%, reaching a new high since April 2022. As a result, Coinglass data shows that in the past 24 hours, the total liquidation amount in the cryptocurrency market was approximately $174 million, with bitcoin liquidation exceeding $63.149 million.

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Alongside the increase in bitcoin’s market value, the latest data from 8marketcap shows that bitcoin currently has a market cap of $806.99 billion, surpassing Berkshire Hathaway ($777.3 billion) and Tesla ($759.22 billion), making it the tenth-largest global asset in terms of market value.

Multiple institutions have also made optimistic predictions about the future market trend. According to the latest report from Matrixport, it is projected that bitcoin will reach $63,140 in April 2024 and $125,000 by the end of 2024. This trend is attributed to historical trends, halving of mining rewards, favorable geopolitical and macroeconomic factors, with a predicted three-year bull market.

Michael Novogratz, CEO of Galaxy Digital, recently stated in an interview with Bloomberg TV that the price of bitcoin is expected to “rise significantly” due to the possible approval of the first U.S. spot bitcoin ETF by the U.S. SEC. He predicts that when the announcement for the launch of the spot bitcoin ETF is officially made, BlackRock, Ark, Fidelity, and his own company will “use their sales power to convince people to adopt bitcoin.” The price of bitcoin will rise significantly, especially in the event of a possible interest rate cut by the Federal Reserve, and he believes that by this time next year, bitcoin may reach its historical high.

An analyst from Standard Chartered Bank stated in a recent report, “Bitcoin’s circulation speed is at historically low levels, indicating a significant change in market sentiment compared to the previous bear market cycle. Its prediction from April is still valid, that bitcoin will reach $100,000 by the end of 2024.” Meanwhile, Geoff Kendrick, Head of Forex Research at Standard Chartered Bank, also pointed out that the main catalyst for price increases will be the approval of several U.S. spot bitcoin ETFs. Kendrick and his team expect these approvals to “take place faster than expected.”

From multiple predictions, factors such as the expected approval of Bitcoin spot ETH, the upcoming halving of Bitcoin, and other factors have triggered a bullish sentiment, especially considering the direct cause of the recent surge in the spot ETF. According to information disclosed by the US SEC, the agency has held meetings with Grayscale, BlackRock, Hashdex, Bitwise, VanEck, Fidelity, and Invesco regarding their respective Bitcoin spot ETF applications, and also held a meeting with Ark Invest and 21Shares on the Bitcoin spot ETF application in late November.

When will the ETF with multiple bullish factors be approved? According to Bloomberg analyst James Seyffart, the approval window for the Bitcoin spot ETF is expected to be between January 5th and 10th, 2024. According to the SEC’s documents, the comment period for Franklin Templeton and Hashdex will end on January 5th, and the comment deadline for Ark/21Shares is January 10th. However, SEC Chairman Gary Gensler recently remained silent when asked about the outlook for Bitcoin spot ETF and stated that he would not “prejudge” the matter.

Limited Christmas decline in past years, positive market sentiment

Although the market generally holds a positive attitude towards future market performance, the reduced liquidity caused by major markets closing for the Christmas holiday has led to concerns that Bitcoin may face a certain degree of correction.

According to statistics from LianGuaiNews on the Bitcoin trend in the week before and after Christmas from 2014 to 2022 (December 22nd to December 28th), the performance in recent years was approximately -4.1% (2014), -3.5% (2015), 13.7% (2016), 6.9% (2017), -6.7% (2018), 1.5% (2019), 15.7% (2020), 3.3% (2021), and -0.7% (2022).

From the above data, the probability of a decrease in the Bitcoin price is 44.4%, with an average decline of -3.7%; the probability of an increase is approximately 55.6%, with an average increase of 8.2%. In other words, even if Bitcoin experiences a decline, the decline is limited.

Looking at this year’s market situation, institutional open and disclosed holdings have greatly boosted market confidence.

For example, the recent steady growth of Bitcoin futures on the Chicago Mercantile Exchange (CME) implies positive market sentiment. According to Coinglass data, as of December 4th, the open interest (OI) of Bitcoin (BTC) futures on CME has risen to $4.41 billion, surpassing Binance and becoming the largest Bitcoin futures trading platform, indicating a high level of market interest. In response to this, Giovanni Vicioso, CME’s Head of Futures Products, commented that institutional interest in cryptocurrencies is increasing in addition to the attractiveness of regulated cryptocurrency products.

Publicly listed company MicroStrategy once again purchased approximately 16,130 bitcoins for a total of $593.3 million in cash in November, with an average purchase price of approximately $30,252 per bitcoin. According to recent weekly report data released by CoinShares, the funds invested in digital asset investment products saw a net inflow of $346 million within one week, marking the largest weekly inflow amount for nine consecutive weeks, and the largest scale increase since the bull market at the end of 2021.

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