Matrixport Market Watch: Global liquidity continues to tighten, what is the future trend of BTC?

Last week, BTC showed a downward trend at the top of the "M shape", and the price fluctuated greatly. Although there have been many sharp rises and falls, there is still some buying support at low levels. From December 25th to 26th, BTC reached $100,000 twice and reached a clear high at $99,963.7. Subsequently, the BTC price fluctuated in the downward channel and stopped falling near $91,530.45 many times, forming a long-term key support. Bulls tried to resist. However, the overall trend is still accompanied by heavy volume during the decline and shrinkage during the rebound, showing that the market is still dominated by short sellers. The current price of BTC is $94,540.02 (the above data comes from Binance spot, December 31, 16:30).

Since Trump was elected, the inflow of funds into the spot ETH ETF has increased significantly, and the growth trend during the same period has even exceeded that of the BTC spot ETF. Last week, the spot BTC ETF had a net outflow of $388 million, and the spot ETH ETF had a net inflow of $349 million. Trump is about to take office in January, which may further push ETH to become the best-performing mainstream token in the next quarter.

Market interpretation

Cryptocurrency investors surge in South Korea, as won 's fall drives premium trading

On December 28, CryptoQuant CEO Ki Young Ju pointed out that the Korean won exchange rate fell to the lowest in 15 years, prompting Korean investors to exchange Korean won into BTC and USDT through exchanges such as Upbit at a premium of 3-5% to avoid exchange rate risks.

As of November, the number of cryptocurrency investors in South Korea exceeded 15.59 million, accounting for more than 30% of the total population. This growth is closely related to US President-elect Trump’s pledge to support the crypto industry, and the rise in BTC prices has further promoted this trend. The total cryptocurrency holdings of Korean investors reached 102.6 trillion won (approximately $70.8 billion), a significant increase from October.

As South Korean investors' interest in cryptocurrencies increases and exchange rate risks rise, premium trading in the crypto market has become more significant, and the market's demand for safe haven crypto assets such as BTC and USDT has increased.

The U.S. debt ceiling crisis may trigger BTC downside risks

On December 30, US Treasury Secretary Yellen warned that the debt ceiling would be hit in mid-January 2025, and risk aversion in global markets is rising. She said the Treasury Department would take "extraordinary measures" to reduce borrowing after the peak, but urged Congress to act quickly to preserve U.S. credit. The news triggered volatility in risk assets, with major U.S. stock indexes down about 1%, while BTC also fell 4% from its intraday high.

In addition, debt issues in the macro context are also core variables. Since the United States established its debt ceiling in 1939, its total national debt has exceeded $36.2 trillion. In the current environment of global macroeconomic turbulence and political uncertainty, the BTC market may face greater pressure.

Institutional BTC adoption rate accelerates in 2024, KULR Technology purchased 217.18 BTC for $21 million

Starting from the approval of spot BTC ETF in the United States to more companies including BTC in asset reserve planning, BTC is becoming a mainstream asset. BTC has risen nearly 130% this year, approaching the psychological mark of $100,000. Net inflows into ETFs in January reached US$36 billion, with holdings exceeding 1 million BTC.

This trend started with MicroStrategy in 2020 and has attracted more enterprises to participate. The latest addition is KULR Technology, which produces energy storage products for the aerospace industry. The company purchased 217.18 BTC for $21 million and plans to invest up to 90% of its surplus cash in BTC. At the same time, the BTC Standard Company ETF submitted by Bitwise will track company stocks holding more than 1,000 BTC. The BTC Bond ETF submitted by Strive Asset Management further promotes the diversification of BTC investments by providing exposure to corporate bonds targeting BTC.

The mainstreaming of crypto-assets is growing rapidly with continued institutional participation, with BTC seen as a long-term investment tool to hedge against inflation and geopolitical risks.

Trump will take office on January 20 and is expected to issue at least 25 executive orders

After Trump successfully ran for president in early November, the market experienced a month-long continuous rise. Trump has shown himself to be crypto-friendly, and the heads of various departments he has nominated are mostly people who are pro-crypto market. The chairman of the SEC, who has always been criticized, is also about to leave his post. This cannot help but make the market generally optimistic about the future of the crypto market. manner.

According to Coinbase data, compared with the previous term, the proportion and number of people who agree with encryption for the new congressmen who are about to take office are significantly ahead. Michael Rosen, chief investment officer at Angeles Investments, said: “Trump’s inauguration may also bring some surprises to the market, and he is expected to issue at least 25 executive orders on his first day in office, covering everything from immigration to energy and cryptocurrency policy. A series of questions.”

Market hot spots

FTX is about to begin its first round of cash repayment of debt, and compensation will flow into the market to indirectly reduce selling pressure.

On December 17, FTX and its associated debtors announced that the Chapter 11 reorganization plan approved by the court will officially take effect on January 3, 2025. The first round of distribution will be launched within 60 days after the effective date and will only be available to approved debt holders in the Convenience Classes. FTX has reached an agreement with cryptocurrency custodian BitGo and trading platform Kraken to provide asset allocation services to retail and institutional clients.

According to data disclosed by HODL15Capital, FTX included US$16 billion in cash in the first round of repayment distribution that officially took effect on January 3. Some of the tokens previously held by FTX/Alameda, such as SOL/WLD, have been basically sold. Creditors are compensated not in tokens but in cash, which indirectly reduces market selling pressure and increases the probability that part of the compensation funds will flow into crypto again, thereby boosting the market.

Tether clarifies rumors that USDT is illegal in Europe

Recently, there are rumors that USDT will be deemed illegal in Europe on December 30, 2024, causing market concerns. In response, Tether CEO Paolo Ardoino made several comments on social media platform .

According to the EU's Cryptoasset Market Regulation (MiCA), stablecoin issuers need to comply with specific regulations, but the regulations provide a transition period of 6 to 18 months, which means that USDT's legal status is not currently threatened. In addition, Tether plans to launch new stablecoins (such as EURQ and USDQ) that are compliant with MiCA standards to ensure its compliance and continued operations in the European market.

It is worth mentioning that although MiCA requires stablecoin operators to deposit more than 30% of their liquidity in banks, Tether has expressed reservations about this rule, believing that it may have an adverse impact on the liquidity management of stablecoins. However, so far, Tether has not experienced any financial problems or illegal behavior, and its market position remains stable.

Trump 's inauguration as President of the United States has driven a surge in crypto OTC trading volume

Recently, a number of crypto trading companies have reported that cryptocurrency OTC volume has grown rapidly in recent months, with Trump's election becoming a key driving force. Tim Ogilvie of Kraken Exchange said that OTC trading volume increased by 220% year-on-year. Traders noted that market participants actively prepare and initiate trades as the election approaches. The price rise of mainstream currencies such as BTC and ETH has pushed projects and investors to manage funds and risks within the new price range. BitGo also pointed out that the election results were the dominant factor in the recent surge in trading volume, and some companies' trading volumes have returned to levels at the market peak in 2021.

The United States, the United Kingdom and the European Union have strengthened cryptocurrency tax regulations, and investors need to pay attention to tax rates and compliance requirements

The United States, the United Kingdom and the European Union are strengthening tax regulations on cryptocurrencies, affecting investor operations. In the United States, cryptocurrency transactions are subject to capital gains tax, and the tax rate is based on holding time and income; miners and staking gains are subject to income tax, and transactions will need to report data starting in 2025. The UK levies a capital gains tax of up to 24% on crypto asset transactions, with an exemption of £3,000; miners and salary income are subject to income tax and national insurance. EU countries have different tax rates. Germany is tax-free if held for more than one year, and Spain has a tax rate of 28%. The 2025 MiCA regulations will unify some rules and enhance tax transparency.

Disclaimer: The above does not constitute investment advice, an offer to sell or a solicitation of an offer to buy to residents of the Hong Kong Special Administrative Region, the United States, Singapore and other countries or regions where such offer or solicitation of offers may be prohibited by law. Digital asset trading can be extremely risky and unstable. Investment decisions should be made after careful consideration of individual circumstances and consultation with a financial professional. Matrixport is not responsible for any investment decisions based on the information provided in this content.