Market Update December 2024: Bitcoin nears $100.000 in record-breaking November

As we approach the end of 2024, the crypto asset market has demonstrated remarkable resilience and growth. Bitcoin's impressive +41,47% monthly gain, approaching €95.450, alongside Ethereum's exceptional +47,57% performance, reflects robust market momentum. This strength is further evidenced by unprecedented U.S. Bitcoin ETF inflows reaching $6,2 billion in November, while significant developments in the political landscape, including key appointments in the incoming administration, continue to shape the market's trajectory. Meanwhile, Europe faces its own challenges, particularly in France, where mounting fiscal pressures have led to market uncertainties reminiscent of the 2012 Eurozone crisis.

📈 Market Update

A brief analysis on Bitcoin, Ethereum and Blockrise Fundamentals:

Bitcoin Analysis

Recent market data indicates a strategic shift among long-term Bitcoin holders, who have initiated a measured reduction in their positions, concurrent with exchange reserves reaching historically low levels. Despite substantial unrealized gains in previous months, market participants demonstrated notable restraint in profit-taking activities. This conservative approach, combined with positive market sentiment, contributed to robust momentum, resulting in a monthly appreciation of +41,47%, with Bitcoin approaching €95.450. While long-term holder positions have decreased and measured profit-taking continues alongside declining reserves, our portfolio management team's analysis suggests the absence of indicators pointing to a substantial near-term market reversal.

Ethereum Analysis

Ethereum demonstrated notable market strength this month, achieving a remarkable performance increase of +47,57%, surpassing Bitcoin's growth rate for the first time in recent months. Despite this significant recovery, Ethereum remains approximately 10% below its All-Time High (ATH), while Bitcoin has exceeded its previous ATH by 42%. This market dynamic reflects the current investor focus on Bitcoin as the dominant crypto asset. Furthermore, Bitcoin's price movements have shown minimal correlation with alternative crypto assets, indicating its independent market trajectory.

Fundamentals

Blockrise offers comprehensive care with its asset management strategy called "Fundamentals." This strategy involves managing assets in Bitcoin and Ethereum versus a euro position, reassessing and adjusting these positions monthly.

Our Fundamentals strategy has demonstrated exceptional performance, achieving a year-to-date (YTD) return of +105%, primarily driven by a robust monthly performance of +38,1%. While we observed the Bitcoin Hashrate reaching an all-time high, indicating increased operational costs, the asset's price appreciation outpaced these costs, resulting in an enhanced Bitcoin premium. In response to these market conditions, we have implemented a strategic profit-taking approach, increasing our Euro allocation to optimize risk management.

Based on our comprehensive monthly portfolio assessment and detailed analysis of current market dynamics and volatility patterns, we have adjusted our strategic allocation to: 70% Bitcoin, 15% Ethereum, and 15% euros. This refined positioning enables us to maintain substantial crypto asset exposure while implementing prudent risk management measures in the present market environment.

🗞 Crypto Highlights

An overview of the most notable events in crypto:

The minting spree and political entanglement

Tether, the prominent stablecoin issuer, has demonstrated significant market activity with the issuance of $5 billion in digital assets within a 72-hour period, concurrent with Bitcoin's price appreciation. This substantial market intervention has garnered attention from financial analysts, particularly given Tether's market prominence. A key development involves Howard Lutnick, Chief Executive Officer of Cantor Fitzgerald, the established Wall Street brokerage firm, who serves as a member of the presidential transition team.

In his capacity, Mr. Lutnick has provided assurances regarding Tether's financial integrity, notwithstanding ongoing regulatory examinations. Notably, Cantor Fitzgerald has acquired a 5% stake in Tether, valued at $600 million, strengthening their strategic position. Furthermore, discussions between Lutnick and Tether concerning a $2 billion Bitcoin lending initiative indicate deepening institutional involvement.

Analysis from SpotOnChain reveals Tether's systematic issuance strategy. The firm initiated with a $1 billion issuance on November 6th, correlating with Bitcoin's rise to $76.000. Additional issuances of $2 billion occurred between November 9th and 10th, contributing to market momentum beyond $80,000. The cumulative $5 billion issuance within 72 hours follows historical patterns where increased Tether circulation has corresponded with crypto asset market appreciation. The last month witnessed Tether expanding market circulation by $17 billion, coinciding with Bitcoin almost reaching $100.000.

Record inflows in wake of Trump optimism

U.S. Bitcoin ETFs have experienced unprecedented capital inflows, reaching a record $6,2 billion in November. Notable institutional participants include BlackRock and Fidelity, surpassing the previous record of $6 billion set in February, which preceded Bitcoin's substantial price appreciation to $7.000 in March.

The sustained influx of capital into Bitcoin ETFs demonstrates growing institutional recognition and acceptance of crypto assets as a legitimate investment class. The anticipated leadership transition at the SEC, coupled with the incoming administration, suggests favorable conditions for continued investment growth.

The crypto asset ecosystem continues to evolve as established financial institutions develop proprietary crypto asset solutions and pursue strategic acquisitions. Furthermore, asset management firms are advancing fund tokenisation initiatives to enhance market accessibility. While these developments indicate positive momentum for crypto asset adoption, it is important to note that despite current price levels, the total market capitalisation suggests significant potential for expansion. Although short-term market dynamics remain challenging to predict with certainty, the long-term trajectory indicates potential for sustained market growth.

🏦 Macro Economy

An overview of relevant global economic events:

The new government is taking shape

The crypto asset markets have demonstrated a notably positive response to the recent U.S. presidential election results. President-elect Trump is currently engaged in the strategic selection of key administrative positions, conducting thorough interviews with distinguished individuals across the nation.

In a significant appointment, Scott Bessent, an experienced financial executive, has been designated as Treasury Secretary. Among Bessent's primary challenges will be addressing the substantial short-term debt obligations. The present administration's policy of converting long-term debt to short-term instruments has created a significant refinancing requirement for 2025, comprising approximately 25% of total outstanding obligations.

Additionally, Howard Lutnick, a distinguished figure in financial services and CEO of Cantor Fitzgerald, has been appointed Secretary of Commerce. These swift executive appointments indicate the incoming administration's commitment to implementing its agenda expeditiously following the January inauguration.

French financial market turbulence

France's borrowing costs compared to Germany have escalated to levels not seen since the 2012 Eurozone crisis. Financial markets responded negatively on Wednesday, with French sovereign bonds and equities experiencing significant declines amid mounting investor concerns regarding potential governmental instability stemming from budget-related disputes.

Prime Minister Michel Barnier has proposed a comprehensive fiscal package encompassing €60bn in spending reductions and revenue enhancements, despite lacking parliamentary majority support. His decision to employ constitutional measures to circumvent parliamentary approval processes has created the possibility of a no-confidence vote, potentially jeopardising both his administration and the proposed budget.

Market volatility has intensified due to uncertainties surrounding the Barnier administration's stability. The Prime Minister has cautioned that failure to implement these measures could result in significant market disruption and financial instability. The European Commission has placed France under enhanced fiscal surveillance, noting that their deficit currently exceeds European guidelines by 100 percent.