As a seasoned cryptocurrency enthusiast who has witnessed the rise and fall of numerous market cycles, I can confidently say that the current state of the market presents a unique opportunity for those with patience and a keen eye for value. The recent downturn, while disheartening for some, is not uncommon in this volatile industry.
Having lived through multiple bull runs and bear markets myself, I have learned to appreciate the value of taking a long-term approach to investing in digital assets. The market’s volatility can be daunting, but it also presents opportunities to accumulate quality projects at discounted prices.
The recent increase in stablecoin reserves on Binance is particularly noteworthy, as it suggests that investors remain bullish on the market and are actively positioning themselves for potential upside. As a trader who has weathered numerous storms in the crypto markets, I find solace in this sign of investor confidence.
That being said, it’s important to remember that the market can be unpredictable, and one should never invest more than they can afford to lose. As my grandma used to say, “Don’t put all your eggs in one basket, or you might end up with scrambled investments!”
Joke: You know what they call someone who doesn’t understand Bitcoin? All their money!
Bitcoin (BTC) counts down to the end of 2024 trading in a crucial area for its latest bull run.
- BTC price volatility is “brewing” in short timeframes, according to analysis, as monthly support comes into view.
- Jobless claims are the macro event of the week, but “stagflation” concerns are the real elephant in the room for risk-asset traders into 2025.
- Is Bitcoin due for a bounce? Short-term holder profitability is at a turning point.
- Whales stay curious in crypto despite the holiday period seeing apathy among retail investors.
- Stablecoin reserves on Binance remain near historical all-time highs despite the market dip.
Bitcoin hovers near range lows — for now
Following a relatively tranquil weekend, the value of Bitcoin took a sudden dip, now it’s close to the bottom of its price range established in December, as per information from CryptoMoon Markets Pro and TradingView.
Over the holiday season, things have been relatively slow, but as we approach the final two trading days on Wall Street in 2024, there are indications suggesting a temporary shift might be happening.
In a recent update on platform X, the well-known trader Skew noted that the price is currently hovering near a crucial level, which represents last week’s low and aligns with the broader historical trend (value area low & weekly open).
“Volatility is brewing imo.”
In simpler terms, Skew believes that the initial opening price of about $93,550 on Bitstamp will significantly impact the immediate price fluctuations in the coming days.
In simpler terms, the value of BTC relative to USD had an opportunity to correct minor discrepancies or “mispricings” that were pointed out earlier by a fellow trader known as CrypNuevo.
As a researcher studying market dynamics, I’m anticipating that the market will work to rectify any existing OI imbalances, which I believe could occur in approximately the coming week. Additionally, I’ve identified potential target levels for the price, reaching around $93,500.
As a seasoned trader with over two decades of experience, I’ve learned that areas of high liquidations can often signal further price drops. Currently, these hotspots are around the $92,000 mark, and I believe it’s essential to be cautious as we approach this level. In my career, I’ve seen similar situations lead to significant market fluctuations, so I urge fellow traders to tread carefully in these volatile times.
“Zones with high amounts of liquidations tend to act as magnets,” he told X followers.
“Sometimes we can see reversals from these zones, so keep an eye on them.”
According to CryptoMoon’s latest report, the predicted drop in Bitcoin (BTC) prices might lead us back to around $90,000, and there is even speculation that a more significant correction could occur during the upcoming quarter.
In his market analysis before the weekly close, well-known trader and analyst Rekt Capital cautioned that “previously weak structures are now providing strong opposition,” which essentially means the same thing: old supports (weak points) are now serving as new resistance (obstacles).
“As a result, technically, the breakdown has been confirmed.”
Stagflation risks becoming “the theme of 2025”
This upcoming week, with U.S. markets remaining relatively calm, unemployment statistics will continue to serve as the most crucial economic data points to watch.
2025 begins with the release of initial jobless claims on January 2nd, which serves as the first crucial economic indicators affecting risky investments for the year.
Against a background of “stagflation” cues, crypto continues to be sensitive to employment shocks.
As the Federal Reserve still has a month left before their upcoming meeting about interest rates, financial markets are increasingly skeptical that additional rate reductions will be implemented in the coming year.
Investors are concerned that history might repeat itself, as the economic conditions could mirror those of the 1970s with high inflation. The Federal Reserve is lowering interest rates because the job market is weak, but at the same time, inflation is increasing.” (The Kobeissi Letter stated this in a discussion on X thread on Dec 29.)
“The beginning of stagflation is here and the Fed has yet to acknowledge it. We could see 4%+ inflation next year.”
A resurgence in inflation might potentially impede the advancement of cryptocurrencies and other high-risk assets. Meanwhile, the “stagflation” predicament – characterized by increasing inflation combined with growing joblessness – continues to be a concern following the latest economic data.
Kobeissi said that it expects stagflation to become “the theme of 2025.”
Indeed, approximately half of the wealthy investors anticipate experiencing stagflation by the year 2025, according to a survey conducted by Bank of America.
“Just 6 months ago, Fed Chair Powell said he’s ‘not seeing the stag or the flation.’”
Seller exhaustion begins as metric nears 3-month lows
According to the latest report from CryptoMoon, while the upward momentum of Bitcoin has temporarily halted at approximately $108,000, the potential for a decline in its value by December remains relatively minimal.
In my analysis, the latest 15% drop appears to be relatively modest compared to typical drawdowns during past bull markets.
Data from onchain analytics platform Glassnode puts the trip toward $90,000 in context.
Following Bitcoin’s previous record peak at $73,800 against the US Dollar in March, Glassnode suggested keeping an eye on short-term holders as a potential indicator for when the market might recover.
As an analyst, I found that Bitcoin’s Market Value to Realized Value (MVRV) ratio and the amount of realized losses appeared to have influenced the market dynamics significantly.
In their recent newsletter titled “The Week Onchain,” they mentioned that we currently possess a tool to identify areas where short-term traders might be running out of sellers due to exhaustion.
The metric, originally devised by ARK Invest, which measures the difference between Supply held at a profit versus at a loss and is described by Glassnode as identifying “turning points in bull and bear markets,” has currently reached its balance point where profits and losses are equal.
Previously, the Profit/Loss Ratio for Temporary BTC Holders (STH) bottomed out below 1 only during the initial days of October, coinciding with Bitcoin’s trading against the US Dollar at approximately $60,000.
Whales keep bullish hopes alive
2024 could see crypto markets closing the year with significant gains, though it’s unlikely they’ll reach another record high based on current research indications.
According to recent market analysis by research firm Santiment, published on December 28th, “whales” could potentially contribute to the appearance of upward price movements (referred to as “green candles”) in the coming year.
The explanation given was that there was a lack of total trading activity, coupled with a growing indifference from individual investors as the temporary optimism fades away.
“In the final days of 2024, trading volume is way down across crypto sectors,” it reported.
“Overall, there has been -64% less trading in the past week compared to the previous week (which included Bitcoin’s all-time high).”
According to Santiment, whales appear to be eagerly increasing their market involvement, and if they persist with this trend, the outcomes should become apparent.
As a seasoned trader with over a decade of experience under my belt, I’ve come to expect some level of trading downtrend during the holiday season, especially when it comes to speculative altcoins. In fact, I can recall numerous years where the final week of December was one of the least active periods in the entire year. This is because traders are typically busy wrapping up their year-end finances and preparing for the festivities, leaving little time or motivation for trading. It’s a cycle that I’ve come to anticipate and adjust my strategies accordingly. So, if you’re new to the game, don’t be alarmed by the dip in activity during this time – it’s just part of the ebb and flow of the market.
“With all of this said, if whales continue showing their strong accumulation trend, the lack of retail participation may actually lead to at least one final big unexpected 2024 pump while retail pays little attention.”
Binance stablecoin reserves point to market health
Amidst temporary cryptocurrency market dip, rising stablecoin reserves indicate growing investor trust.
On December 30, as mentioned in a post from their Quicktake blog, the cryptocurrency analytics platform CryptoQuant disclosed that the world’s largest crypto exchange, Binance, has amassed unprecedented reserves of stablecoins.
On December 11th, the combined reserves of Binance’s stablecoins reached an impressive $31 billion, representing almost a five-fold growth over an eighteen-month period.
As a researcher, I’d rephrase it like this: “With approximately $30 billion in reserves, it seems that investors are still heavily engaged in the market, possibly exerting robust buying force.
After that point, the Binance reserve total has decreased somewhat, amounting to approximately $29.7 billion as of December 29, according to data from CryptoQuant.
The customary association between high levels of stablecoins within cryptocurrency exchanges and a bullish crypto market trend has been a topic of debate.
In November, the CEO of CryptoQuant, Ki Young Ju, stated that while having large reserves may not directly cause a Bitcoin price surge or bull market on its own.
He stated that Stablecoins by themselves may not offer sufficient purchasing liquidity for Bitcoin, pointing out the Bitcoin to Stablecoin reserve ratio as an indicator.
Last week, CryptoMoon shared insights about different forecasts for the stablecoin market in 2025, one of which predicted a market value of around $300 billion.
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2024-12-30 12:05