The weakening U.S. dollar, the rally in bond prices, a drop in treasuries yield and rising expectations of Fed rate cuts are driving the price of cryptocurrencies and other risky assets. The reaction of Bitcoin itself is similar to gold this time around. The largest of the cryptocurrencies has already completely erased the declines caused by the collapse of Luna/Terra, in May 2022. Macro factors are not the only ones boosting sentiment. Investors are awaiting the SEC's decision on Bitcoin ETFs and are pricing the chances of another 'halving bull market' in the spring of 2024.
- Bitcoin is gaining 4.2% today at a time when smaller cryptocurrencies such as Solana, Avalanche and Polygon are losing in the 3 to 5% range. Potentially, this could suggest that capital is much more interested in Bitcoin itself than in smaller, speculative cryptocurrencies. Sushi and BitcoinCash are doing great, posting 8 and 6 percent gains, respectively. All other projects today are clearly struggling to match Bitcoin's outstanding growth.
Strong December opening
ByBit Research analysts highlighted that institutions are looking much more favorably at Bitcoin than other cryptocurrencies. BTC reserves in institutions' portfolios have doubled since the beginning of the year, through Q3. Bitcoin's correlation with gold prices in 2023 is quite high, at around 64%. Statistically, December was the second-best month for Bitcoin (after November, but it is worth noting that the December result 'distorts' the 95% rally of 2017). However, if it were to average December's result, $42,000 indicates that the price has already risen nearly 9% since December 1, leaving little room for the average. Keep in mind that Bitcoin's capitalization is now many times higher a than in previous years, making it more difficult to have dizzying changes similar to 2015-2020.
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Create account Try a demo Download mobile app Download mobile appAverage returns on Bitcoin by month (2015–2023). Average yield for December is 11.5, higher is only November. Source: XTB Research
Bitcoin has approached the $42,000 resistance where we can see the 50.0% Fibonacci retracement Source: xStation5
The correlation of BITCOIN to GOLD (gold chart, GOLD) is apparent (64% in 2023), but in the short term, the two assets can move in complete isolation. After gold broke through $2150 and dynamically retreated back to $2070 per ounce, we even see divergence. Source: xStation5
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