Crypto Market Analysis - 27 Dec
2024-12-17
Category: None

The Crypto Market Has Everyone Confused!
Nobody knows how far Bitcoin will go up, when the altcoin season will start, or even if there will be an altcoin season!

On the day of the U.S. presidential election, Bitcoin was hovering around $68,000. As polls started to favor Donald Trump, the crypto-supporting candidate, Bitcoin's price showed even stronger bullish momentum. Since then, Bitcoin has risen nearly 58%, continuously setting new price highs. At the time of publishing this analysis, Bitcoin's price peak is now $107,000!

Many people are waiting for Bitcoin's price to drop, looking for a chance to hop on this speeding train. But we need to see if the market will give them the opportunity to enter at lower prices. Even if you are an altcoin investor or trader, you still need to monitor Bitcoin closely because it determines the direction of the whole market. Let’s dive into the current state of cryptocurrencies, especially Bitcoin.

Unlike those who are always either in the bull or bear camp, I always try to look at the market objectively and without bias. Right now, since Bitcoin has grown 58% in the last 40 days without any significant corrections, many are expecting a sharp price drop and have placed their orders at much lower prices. But in reality, there are no clear signs indicating that Bitcoin or the market as a whole is in a bubble or has overheated to the point where a crash is imminent.

One of the key indicators I’ve been monitoring is the funding rates. Funding rates, which reflect the imbalance between long and short positions, are currently completely normal. Unlike early 2024, we’re not seeing excessively high funding rates that would require a market reset. If funding rates were too high, I’d say the market heat and bubble need to cool off soon—but that’s not the case right now.

The situation with open interest is a little different. A quick look at open interest shows that the volume of open positions in Bitcoin futures has increased significantly. This suggests that a price correction may bring it down, reducing the current market hype. However, even considering this high open interest as a sign of a potential price correction, I don’t expect Bitcoin to fall to the levels that bears are hoping for. If we use open interest as our basis, I don’t expect Bitcoin to drop below $90,000.

Realized Profit Ratio is another metric that tells me Bitcoin still has room to grow. This indicator shows whether whales are taking profits and exiting the market, which usually accelerates at the end of a bull run. The chart you see shows this metric for whales holding 10–100 BTC, 100–1,000 BTC, and 1,000–10,000 BTC. Compared to the peak of the previous bull cycle in late 2021, when Bitcoin hit its all-time high of $69,000 before plummeting, it seems that whales have not yet started exiting the market.

Another fascinating development is that some large Bitcoin mining companies are not only holding onto their Bitcoin but are also buying more! Until now, we’ve known miners as sellers who put sell pressure on the market. But now we’re seeing major mining companies, like MARA Holdings, raise capital by selling securities just to buy more Bitcoin! Miners are no longer selling Bitcoin—they’re buying it! That’s really something new!

There are multiple indicators to analyze, but I want to wrap up this week’s analysis by discussing one of the most important factors in the current cycle. There’s no doubt that Bitcoin’s powerful growth from early 2024 and its rise above $100,000 this year is thanks to the launch of spot Bitcoin ETFs in the U.S. Before these ETFs launched, we already had spot Bitcoin ETFs in countries like Canada and Bitcoin futures ETFs in the U.S. However, the U.S. spot ETFs, backed by the world’s biggest investment firms, changed the game.

This event brought billions of dollars from traditional investors who had been unwilling to invest in Bitcoin through crypto exchanges. Now they’re entering the market for the “king of cryptocurrencies.”

The key point is that these Wall Street investors behave differently from typical Bitcoin whales. They allocate only a small percentage of their portfolios, like 1% to 5%, to Bitcoin, as part of a diversification strategy, and they take a long-term view. This means we shouldn’t expect a sudden, massive outflow of funds from spot ETFs, which would quickly impact Bitcoin’s spot price.

Right now, many people are wondering: Will there be an altcoin season? And if so, when will it happen? In the next analysis, I'm going to analyze this exciting topic in detail.
