Market Insights: DEC 2024 | Week5
Wavebridge Research/
Bitcoin’s Growth and Clean Energy Milestone
Bitcoin's market capitalisation was around $82.8 billion on 1 January this year, and has now reached $1.91 trillion. The market capitalisation of the cryptocurrency market as a whole was around $1.67 trillion at the start of the year, rising to $3.27 trillion by the end of the year. Bitcoin accounted for $1.6 trillion of the market capitalisation increase, or about 66% of the market growth. The percentage of clean energy used in Bitcoin's mining process hit 56.76%, meeting Elon Musk's conditions for resuming Bitcoin payments. Musk has stated that Tesla will resume accepting Bitcoin payments if the percentage of clean energy used in Bitcoin mining exceeds 50 per cent. Bitcoin accumulation addresses were net buyers of 225,280 BTC during the month. Bitcoin net longs increased 82.6% month-over-month. It has been suggested that the price of Bitcoin has a lagged correlation of about 10 weeks with M2, the global money supply. Meanwhile, BlackRock's recent move of $1.88 billion worth of Bitcoin to its Coinbase wallet has raised concerns about a possible massive selloff. BlackRock currently holds approximately 553,162 BTC, or 2.6 per cent of the total Bitcoin supply.
Tether’s EU Delisting and Crypto Market Liquidity Concerns
After failing to meet the MiCA criteria introduced by the European Union, Tether will be delisted from major European exchanges from 30 December 2024. Concerns have been raised that the European ban on USDT could cause a severe liquidity crisis in the crypto market. USDT issuer Tether is expected to post a net profit of over $10bn this year. Most of Tether's gains come from investing USDT reserves in US Treasuries, gold, and other assets. US fund manager Volatility Shares has filed a proposal with the US Securities and Exchange Commission to launch a solana futures-based ETF. The Ethereum monthly futures contract posted an 11% annualised premium to the spot market, suggesting that the market remains bullish despite repeated price resistance. Ethereum NFT trading volume increased significantly, reaching a three-month high of $186 million. This is a 67% increase from the previous week's $111 million. Ripple's RLUSD stablecoin made its official debut on the Singapore cryptocurrency market. RLUSD is listed on Independent Reserve, a Singapore-based regulated cryptocurrency exchange. SuiLend, a lending platform based on the Sui blockchain, surpassed $500 million in TVL, making it the largest DeFi platform on the Sui blockchain.
Regulatory and Institutional Crypto Developments
US President-elect Trump appoints Bo Hines to head the incoming administration's cryptocurrency advisory council. The US Internal Revenue Service reaffirms its stance on the taxation of cryptocurrency staking. It will tax staking rewards as soon as they are received. Crypto.com announces the establishment of a trust company in the US, furthering its North American expansion. The new entity will provide digital asset management services to high net worth individuals and institutions in the US and Canada. US asset manager Strave has asked US regulators to list an ETF that invests in convertible bonds issued by MicroStrategy and other corporate BTC buyers. Bitwise stated that ‘there is less than a 10 per cent chance that a federal Bitcoin strategic reserve will be established in 2025,’ arguing that such a reserve is essential if Bitcoin is to surpass $1 million in 2025.
Innovation in Crypto Services and Platforms
In Hong Kong, a bill to regulate stablecoins was introduced in the Legislative Council. Stablecoin issuers would be required to obtain a licence from the Hong Kong Monetary Authority. Japan's Diet recently included cryptocurrencies in its ‘2025 Tax Revision Outline’ for next year's tax reform. The yen, which once accounted for more than half of global trading volume, has seen its global market share shrink to less than 1 per cent since the introduction of high taxes and regulations. Russia's finance minister announced that the Russian government would replace the dollar in international trade with cryptocurrencies. Turkiye introduced new cryptocurrency regulations to strengthen anti-money laundering. El Salvador said it will continue to buy Bitcoin despite warnings from the IMF to reduce its allocation. El Salvador's Bitcoin holdings increased to 6000.77 BTC, valued at around $569.3 million. Six mutual funds that track the price of bitcoin will be launched in Israel. The Russian government announced a policy to ban cryptocurrency mining in 10 specific regions from 2025 to 2031. Cryptocurrency wallet MetaMask partnered with payments giant Mastercard to launch a pilot version of the MetaMask Card. It is currently available in the EU, UK, Brazil, Mexico, and Colombia.