Since Trump won the US election, the crypto market has experienced explosive growth. Bitcoin, as the leader, rose by more than 37% in November alone, with an increase of more than $26,000, pushing the entire cryptocurrency market value to surge by more than $1 trillion, an increase of about 45%. This wave of growth has not only made Bitcoin the focus of investors again, but also ushered in a long-awaited rise in altcoins, and market sentiment is high.
Bitcoin trades sideways, while altcoins surge
After setting ATH prices continuously, Bitcoin encountered resistance at the $100,000 mark and showed a volatile trend. Market funds began to turn their breakthrough points to altcoins. In the past week, the market share of altcoins increased from 8.91% to 11.0%, and the daily transaction share also increased from 23% to 37%. New and old altcoins have started sector rotation, with amazing gains. In November, the total market value of altcoins rose unilaterally by nearly 70%.
Among them, the performance of the old altcoin XRP is particularly outstanding. Driven by the sharp reduction of litigation pressure from the resignation of the SEC chairman, the application for XRP spot ETF, and the South Korean whale, XRP rose 400% in a single month, reaching a historical high. Its market value surpassed USDT and Solana, ranking third in the cryptocurrency market value list, and even surpassed Pinduoduo, rising to 138th among the world's mainstream assets.
In the crypto market, the value of altcoins is often difficult to quantify, and can only be roughly estimated by comparing it with the leading projects in the same track. XRP's FDV surged to over $260 billion, which reshaped the value reference system of most altcoins in the market, released the valuation potential of many altcoins, and demonstrated a strong money-making effect. The arrival of the altcoin season has made the market lively.
Can Bitcoin Reach New Highs in December?
Bitcoin's rapid rise in November has led to a large number of profit-taking transactions in the market. The $100,000 mark, which is just a step away, has never been broken. Data also shows that the net position change of long-term Bitcoin holders is declining, approaching the level near March 2024. Many investors are beginning to worry about whether the current crypto market is overheated. However, from many perspectives, Bitcoin still has great potential for growth in December.
1. The Santa Claus rally in the U.S. stock market boosted market optimism
As the holiday season approaches, the U.S. stock market often sees a Santa Claus rally, a phenomenon in which stock prices often rise around Christmas. This rise is often influenced by holiday optimism, increased holiday spending, and investors' year-end trading. Since 1950, the average increase in the S&P 500 during a Santa Claus rally is about 1.3%.
Since the U.S. stock market and the crypto market are highly correlated, the positive sentiment in the U.S. stock market is expected to provide a stable external environment for the crypto market.
2. Bitcoin has seen a significant increase in December every six months
Data shows that after the halving of Bitcoin in 2012, 2016 and 2020, the average success rate of significant gains in December reached 100%. Among them, the return rate was 7% from US$12.57 to US$13.45 in December 2012, 30.8% in December 2016, and 46.92% in December 2020. The return this month is still worth looking forward to. It is worth noting that Bitcoin closed up 7.35% in September this year, setting a record for the best performance in history. Historically, every time Bitcoin closed up in September, it could rise to the end of the year. Learning from history, the historical rise in the same cycle is very consistent with consensus, which also makes Bitcoin have a considerable chance to have a larger upside this month.
3. The Federal Reserve is likely to continue to cut interest rates in December
Interest rate cuts have long been a hot topic in the market. The Federal Reserve announced a 0.5% interest rate cut in September, followed by a further 0.25% cut in November, which accelerated the pace of global interest rate cuts and boosted global market sentiment. Recent US economic data shows that although inflation has shown stubbornness, the downward trend has not changed. Unless the employment or inflation report in November is unexpectedly strong, the Federal Reserve will most likely continue to cut interest rates in December, which will cause funds that were originally on the sidelines or tied to low-yield investment areas to seek higher-yield investment channels and accelerate the transfer of global funds to risky assets. As a highly anticipated asset with great value-added potential, Bitcoin will take on part of the liquidity.
4. There is a big hype period before Trump's inauguration
Last week, Trump's cabinet was basically formed, and almost all of its members are fans of cryptocurrencies, including Trump's own cabinet, which collectively has exposure to cryptocurrencies, an emerging asset. This "all-member cryptocurrency" attitude has greatly increased the market's expectations for the implementation of future crypto-friendly policies, and has also become an important support for the continuation of the December market.
After the 2016 election, many Trump transactions peaked at the inauguration in January. From historical experience, whether it is Trump's shooting or his successful election, the cryptocurrency circle has shown an extremely intense market reaction. Although the inauguration ceremony on January 20 is regarded as a potential market peak, the accumulation of market sentiment often manifests itself in advance. From the current perspective, December may become a key window period for investors to make arrangements.
5. ETF and on-chain funds continue to flow in
The continued inflow of ETFs and on-chain funds also provided strong support for the popularity of the crypto market. Thanks to Trump's promise to implement policies that are favorable to the crypto industry, Bitcoin and Ethereum ETFs set new records for net inflows in November, reaching $6.5 billion and $1.1 billion respectively. This increase shows that the market has a strong demand for these two crypto assets.
On the other hand, the issuance of USDT is also accelerating, with an increase of more than US$13 billion in November, the fastest issuance rate since 2021. At present, the total market value of the stablecoin market has exceeded US$193 billion, a record high, with an increase of 2.3% in the past week.
In addition, the sudden rise of Phantom Wallet also provides an observation window for the market. On November 21, within just half a month, Phantom Wallet's ranking in the Apple App Store jumped from obscurity to the top of the tool category, and the overall ranking reached the sixth place. According to data analysis from Similarweb, Phantom's recent US user traffic accounted for 27.38%, and achieved a significant increase of 24.82% in the past month, showing that the crypto market is attracting more and more people to enter.
Summarize
Although Bitcoin has encountered some resistance after its rapid rise in November, multiple positive factors are working together on the cryptocurrency market, setting an optimistic tone for the December market of Bitcoin and the entire altcoin sector. Bitcoin may end 2024 with an overwhelming positive momentum.
