Market Insights: DEC 2024 | Week2
Wavebridge Research/
Bitcoin's Rapid Growth and Market Potential: A $2 Trillion Milestone
Bitcoin has reached a $2 trillion market value 15 years after its launch. This is much faster than Amazon's 29 years and Apple's 42 years. Bitcoin's realised market capitalisation has risen from $430 billion at the start of the year to $730 billion today. This is attributed to continued buying by large investors. Bitcoin whales recently bought 20,000 BTC, driving the price of Bitcoin. Around 1.45 million bitcoin wallet addresses bought 1.42 million BTC in the $96,000-97,000 price range, creating a wall of demand. BlackRock's bitcoin spot ETF, IBIT, saw weekly inflows of $257 million and surpassed $50 billion in assets under management in its first year of trading, with more than 500,000 BTC held. According to OKG Research, ‘Currently, 0.01% of the world's publicly traded companies hold bitcoin. Conservative estimates put the amount of money that could flow into Bitcoin in the next year at around $2.28 trillion,’ and argues that Bitcoin could rise to $200,000. This was in line with Bernstein and Standard Chartered's forecasts.
Ethereum's Growth and the Rise of Altcoins: Market Shifts and Trends
Ethereum's realised market cap reached a record high of $243.5 billion. In addition, the US Ethereum spot ETF saw net inflows totalling $83.8 million, the 10th consecutive trading day of net inflows. Ripple's own stablecoin, RLUSD, which was scheduled to launch on the 5th, has been delayed. It is reportedly coordinating final approvals with the New York Department of Financial Services. Grayscale Investments filed with the US Securities and Exchange Commission to list Solana as a spot ETF, with plans to trade on the NYSE under the ticker GSOL. Over the past month, 85% of altcoins have outperformed Bitcoin. Memecoin's share of the total cryptocurrency market capitalisation has increased to 3.16%, up from 1.3% at the start of the year. If Bitcoin and Ethereum are excluded, this percentage rose from 4.2% to 11.21% over the same period. Memecoin's combined market value has surpassed $140 billion. According to Google Trends data, altcoin interest has risen sharply since the beginning of November. It was close to the all-time highs recorded during the last altcoin season in 2021, with the biggest spike in interest coming from Europe and Africa.
US Policy Shifts and Strategic Bitcoin Investments Under President-elect Trump
US President-elect Trump has appointed David Sachs to advise him on cryptocurrency and artificial intelligence policy. He heads Kraft Ventures and co-founded PayPal with Elon Musk. He has praised bitcoin for its censorship resistance and ability to hedge against inflation, and has argued that the technology has the potential to separate money from the state. US President-elect Trump nominated former SEC Commissioner Paul Atkins to be the next SEC chairman. Atkins is the founder of crisis management consultancy Patomak Global Partners and is labelled as a ‘pro-cryptocurrency figure’. MicroStrategy Chairman Michael Saylor suggested that the US government sell gold and buy bitcoin. He argued that the US government should buy 20-25% of the bitcoin currently in circulation, and recommended selling its gold reserves to do so. The state of Florida is discussing investing $1.85bn of its pension fund in Bitcoin. Florida's pension fund, which totals $185.7bn and is the fourth largest state pension fund in the US, is considering allocating 1% of it to Bitcoin to create a strategic Bitcoin reserve. The US Treasury has described Bitcoin as ‘digital gold’, a store of value. Fed Chairman Powell has also stated that ‘Bitcoin is an asset that competes with gold, not the dollar.’
Global Regulatory Shifts: Tax Policies and Compliance for Cryptocurrencies
A French senator has proposed a bill that would classify bitcoin and cryptocurrencies as ‘unproductive assets’ and tax them like luxury goods or vacant real estate. The Czech Republic announced a new cryptocurrency tax reform that would exempt bitcoin holders from capital gains tax for at least three years. The Canadian Securities Administrators have tightened regulation of digital assets starting in 2023. Cryptocurrency exchanges in Canada will have to meet stablecoin regulations by the end of this year. The Russian president questioned the validity of holding foreign currency, suggesting that Bitcoin could be a better alternative. The Australian Securities and Investments Commission released a consultation paper proposing revisions to its regulatory guidelines for digital assets, focusing on compliance requirements under the Corporations Act. Brazil's central bank issued regulations restricting stablecoin withdrawals. Indonesia's Commodity Futures Trading Oversight Agency reports that cryptocurrency trading in Indonesia will exceed $30 billion in 2024, a 352% year-on-year increase. The Cambodian government blocked access to 16 cryptocurrency exchanges, including Binance and Coinbase.