The Bitcoin Macro Investor - December 2024

Outlook 2025: Is Bitcoin already overvalued at 100k USD?

Key Takeaways

• Performance: The US presidential election in November acted as a key catalyst for a crypto market rally, with Bitcoin reaching near 100k USD and altcoins, particularly XRP and Cardano, outperforming due to reduced regulatory uncertainty and increasing adoption narratives. Strong on-chain fundamentals, including supply constraints and institutional demand, suggest the rally could extend into 2025, while the altcoin market experienced its highest outperformance since mid-2022, driven by diverse investment themes.
• Macro: The US Dollar has become the most dominant macro factor for bitcoin recently and so the recent Dollar appreciation has turned into a headwind for bitcoin and cryptoassets, especially since it implies a contraction in global money supply. Newly asserted US dominance with the new administration as well as increasing Euro sovereign risks could exacerbate Dollar strength over the coming months. However, increasing Dollar strength should lead to further rate cut odds for the Fed as a strong Dollar jeopardizes the current economic recovery in the US.
• On-Chain: Cycle top probabilities have increased somewhat as sentiment appears to be stretched, and long-term holders have increasingly taken profits. Nonetheless, the Bitcoin supply shock continues to intensify as evidenced by the continuing decline in exchange balances and liquid supply. We expect this to be a major tailwind in 2025, at least until the second half of next year. Moreover, valuations that are only moderately expensive still leave more room for further price appreciations over the coming months.

Chart of the Month

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The Bitcoin Macro Investor - December 2024 (Full Report)

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