Bitcoin Newsletter - Week 49 2024

Weekly update on all things Bitcoin

December 10, 2024

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TL;DR

  • BTC is up

  • Bitcoin dominance is down

  • Bitcoin Hits $100K Amid Trump’s Praise

  • MicroStrategy Expands Bitcoin Holdings

  • US Bitcoin ETFs Surpass Satoshi's Holdings

  • Virgin Voyages Accepts Bitcoin for Annual Pass

  • France Proposes Tax on Unrealized Crypto Gains

  • Russia Recognizes Bitcoin as Legal Property

  • MARA Purchases Wind Farm for Bitcoin Mining

  • BitFuFu Launches Bitcoin Mining Pool-0.4% Rate

  • BIT Mining Sees 3X Profits from DOGE and LTC

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Bitcoin Price

Crypto is up this week, with BTC being down 2.9% and ETH up 7.7%:

Bitcoin dominance has decreased over the week, starting from 54.0% to a low of 51.04% and ending at 51.5%. Investor sentiment, regulatory changes, technological advancements, and the overall growth of the cryptocurrency sector shape Bitcoin's market dominance. Its reputation as "digital gold" also enhances its position, making it a key player in the market.

It’s going to be interesting to see whether this trend will continue in the short term, as capital in crypto tends to flow initially to BTC and then further out on the risk-curve, starting with altcoins like ETH and then into mid- or low-cap coins.

Bitcoin has demonstrated remarkable resilience this week, recovering swiftly from a dramatic 15% flash crash on December 5, which saw its price dip to $90,500.

Despite a 14% drop from its previous all-time high of $104,600, Bitcoin has rebounded by 4.57%, maintaining a bullish position above key exponential moving averages (EMAs) on the 4-hour chart.

The flash crash triggered over $400 million in liquidations, marking the largest such event since 2021.

However, a significant positive outcome was the reset of Bitcoin’s open interest-weighted funding rate, which dropped from 0.09% to 0.01%.

This reset has alleviated leveraged positions in the futures market, making Bitcoin more stable and less vulnerable to further volatility. Analyst Byzantine General noted that if Bitcoin continues to rally following this reset, the market could see substantial upward momentum.

Following the price volatility, Bitcoin formed a "spinning top" candlestick pattern, signaling a period of indecisiveness. This pattern, often observed at key milestones, suggests that the recent fluctuations are likely to be short-lived.

Based on Fibonacci extensions, the immediate target for Bitcoin is $115,000, a 15% increase from the current $100,000 level. If the relative strength index (RSI) remains below overbought territory, there is potential for an aggressive breakout, pushing Bitcoin’s price to as high as $124,500.

Bitcoin (BTCUSD) Analysis:

As of December 7, 2024, Bitcoin (BTC) is trading at $99,663. The short-term outlook shows resistance at $100,000, with a breakout above this level potentially triggering further upward momentum. In the medium term, Bitcoin has strong support around $70,000, and its next key target could be $115,000. The long-term trend remains positive, bolstered by a strong rising trend channel and continued investor interest.

  • Bitcoin (BTC): Support at $92,396.86; Resistance at $115,000.

Market Outlook:

Bitcoin (BTC) has bounced back strongly after a sharp flash crash, currently trading at $99,663. The market sentiment remains bullish, with a key resistance at $100,000 and a potential target of $115,000. Support is seen around $70,000, and overall, the outlook is positive as investor interest continues to drive momentum.

BTC/ETH ratio has seen a decrease:

The BTC to ETH conversion rate has experienced a steady decline over the past six days. Starting from 25.76 ETH per Bitcoin on December 04, the rate gradually dropped, reaching 24.97 ETH on December 07. This represents a decrease of approximately 3.1% during this period, with slight fluctuations along the way.

“Bears are so screwed. Which bears, you ask? All of them..”

Financial News

Bitcoin has reached $100,000 for the first time, a historic milestone attributed to rising institutional interest and regulatory optimism. President-elect Donald Trump claimed credit, linking the surge to his pro-crypto policies and the nomination of Paul Atkins as SEC Chair.

Analysts project Bitcoin could reach $150K-$200K by 2025, fueled by demand from entities like MicroStrategy and U.S. Bitcoin ETFs. The 2024 Bitcoin halving and its expanding role in global finance are seen as key catalysts. While this highlights Bitcoin’s resilience and growing mainstream acceptance, experts caution against overexuberance, noting potential market corrections as prices continue climbing.

MicroStrategy has acquired an additional 15,400 BTC for $1.5 billion, bringing its total holdings to 402,100 BTC, valued at over $38 billion. This latest purchase was funded by selling 3.7 million shares, with the average cost of Bitcoin acquired at $58,263 each. MicroStrategy's total BTC investment now exceeds $23.4 billion.

The company plans to raise $42 billion in capital to continue its Bitcoin strategy. By leveraging equity and debt, MicroStrategy strengthens its position as a Bitcoin pioneer, aligning its long-term goals with the asset’s scarcity. However, sustained success relies on Bitcoin's price appreciation.

US spot Bitcoin ETFs have surpassed the Bitcoin holdings of Bitcoin's pseudonymous creator, Satoshi Nakamoto, marking a significant milestone. As of December 5, these ETFs collectively held over 1.1 million BTC, exceeding the estimated 1.1 million BTC associated with Nakamoto. This achievement follows the launch of Bitcoin ETFs in January 2024.

The ETFs now hold more Bitcoin than major entities like Binance and MicroStrategy. Despite ongoing efforts to uncover Nakamoto’s identity, some, including Galaxy Digital’s Mike Novogratz, believe Nakamoto may no longer be alive, especially following Bitcoin's recent price surge past $100,000.

November’s US jobs report, showing higher-than-expected job growth but a rise in unemployment, is fueling expectations that the Federal Reserve will cut interest rates later this month. Analysts, including Grayscale's Zach Pandl, believe that a rate cut would likely weaken the US Dollar, benefiting assets like Bitcoin.

With a 74.5% chance of a 0.25% rate reduction, Bitcoin’s price rally could extend into 2025. Additionally, a potential $20 trillion increase in the M2 money supply next year could channel $2 trillion into Bitcoin, as the cryptocurrency historically absorbs a portion of new liquidity.

The Commodity Futures Trading Commission (CFTC) achieved a historic $17.1 billion in monetary relief for fiscal year 2024, primarily driven by crypto enforcement actions. This amount includes $12.7 billion recovered from the FTX case, marking the largest recovery in CFTC history.

The FTX collapse led to fraud claims against the exchange and executives, including founder Sam Bankman-Fried. Additional crypto enforcement actions include penalties from Binance, recovering $1.5 billion, and other cases involving fraud and misappropriation. CFTC Chair Rostin Behnam emphasized the agency’s commitment to overseeing markets impacted by disruptive technology.

Adoption News

Virgin Voyages has become the first major cruise line to accept Bitcoin as payment, launching its 2025 Annual Pass for $120,000. This pass offers unlimited luxury cruises, including premium Sea Terrace cabins, internet access, and a $100 bar tab per voyage.

Available from January to March 2025, the pass can now be purchased with Bitcoin, attracting tech-savvy travelers. The decision aligns with Virgin's embrace of digital assets, following Richard Branson’s long-standing support for Bitcoin. Virgin Voyages’ bold move highlights the growing integration of Bitcoin into mainstream travel, paving the way for other companies to follow.

The French Senate has introduced a proposal to tax unrealized gains from digital assets like Bitcoin, replacing the existing real estate wealth tax with an 'unproductive wealth tax.' This policy targets dormant assets, emphasizing crypto holdings. Although the measure passed a preliminary vote, it remains in the early stages and is not yet law.

Meanwhile, political turmoil in France deepened as the government collapsed following a no-confidence vote in parliament, adding uncertainty to the proposal's future. This evolving situation highlights the potential impact of regulatory changes on both the crypto market and broader political stability in France.

Russia has officially recognized Bitcoin as property under new laws signed by President Vladimir Putin, effective November 29, 2024. This groundbreaking move introduces a taxation framework, legalizes Bitcoin trading, and incentivizes mining operations by exempting them from VAT.

Personal digital asset gains are taxed at 13% for amounts up to 2.4 million rubles and 15% for higher thresholds, while corporate mining profits face a 25% tax starting in 2025. The legislation also explores Bitcoin's use in cross-border trade to bypass sanctions. Despite environmental concerns and global scrutiny, Russia's move positions it as a key player in the digital economy.

In a bold 3-minute pitch to Microsoft’s board, Michael Saylor, Executive Chairman of MicroStrategy, urged the tech giant to adopt Bitcoin as a core financial strategy. Highlighting Bitcoin’s potential to revolutionize corporate finance, Saylor argued that investing in Bitcoin could increase Microsoft’s stock price by $584 and add $4.9 trillion to its market cap over the next decade.

He stressed that Bitcoin’s uncorrelated nature offers a superior asset for risk reduction and growth acceleration. Despite excitement among Bitcoin proponents, concerns over Bitcoin's volatility and regulatory challenges remain. The decision will be determined in a shareholder vote on December 10.

Donald Trump’s plan to create a US government Bitcoin reserve has been met with skepticism from former financial officials. Bill Dudley, ex-president of the New York Federal Reserve, argued that Bitcoin, despite its recent surge, is impractical as money, citing issues like lost access and slow transactions.

He believes the reserve would mainly benefit crypto supporters by inflating Bitcoin prices, creating no real value for the government. Other critics, including Lawrence Summers, share similar concerns, viewing the proposal as politically driven rather than economically sound. Dudley suggested that Trump should focus on stronger crypto regulations instead.

Mining News

MARA Holdings, a major Bitcoin miner, has purchased a wind farm in North Texas to support its operations. The 114-megawatt facility in Hansford County was acquired from a joint venture between National Grid Plc and the Washington State Investment Board.

As AI demand for electricity grows, pushing out crypto mining, MARA plans to use the wind farm's power exclusively for mining Bitcoin when the wind is blowing, halting operations when it's not. This move aims to secure a sustainable energy source amid increasing competition for electricity.

American Bitcoin mining firm Foundry has confirmed the layoff of 16% of its staff, despite a boom in Bitcoin prices. The company, based in Rochester, New York, stated that it made the strategic decision to focus on its core business, including operating the world’s largest Bitcoin mining pool and expanding its site operations.

This move comes amid ongoing industry challenges, such as rising mining difficulty and regulatory uncertainty. Foundry also emphasized its support for subsidiaries like Yuma, an AI platform, and the spinout of its self-mining business.

Dallas College has introduced a Bitcoin Mining Certification program to meet the growing demand for skilled professionals in the cryptocurrency sector. The program offers hands-on instruction and industry equipment, including a Bitmain Antminer S19j Pro mining machine for each student.

The 48-hour, intensive course covers key topics such as Bitcoin mining fundamentals, advanced technical aspects, environmental sustainability, and investment strategies. The program costs $4,000, with tuition assistance available, and offers an industry-recognized Web3 Certification Board Mining+ Certification. Graduates can earn between $60,000 and $120,000 annually in the rapidly expanding crypto mining industry.

BitFuFu has launched its private-label mining pool, BitFuFu Pool, offering a competitive 0.4% commission rate to attract both institutional and retail miners. The pool integrates into BitFuFu’s cloud-mining platform, and the company is dedicating its self-mining hashrate to boost capacity and efficiency.

Enhanced services include real-time monitoring tools, customizable firmware, and maintenance support. The company also offers tailored consulting for large-scale operations. BitFuFu aims to expand its pool to include additional digital assets, focusing on strategic growth and long-term asset accumulation, holding 1,664 BTC as part of its treasury strategy.

BIT Mining reported a significant profit boost after expanding into mining Dogecoin (DOGE) and Litecoin (LTC), revealing that this strategy has proven nearly three times more profitable than solely mining Bitcoin (BTC). As of November 27, the company mined over 227 million DOGE, worth $94.8 million, and 84,485 LTC, valued at $10.7 million.

BIT Mining attributed its success to specialized LD3 mining machines acquired in 2021. The company’s diversification into these altcoins, alongside the recent surge in DOGE’s price, has contributed to enhanced profitability despite its 37% stock decline in 2024.

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