Sunshine and Rainbows
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On 5 December, Bitcoin achieved a historic milestone, surpassing the significant $100K threshold for the first time. The total market capitalisation of cryptocurrencies soared beyond $3.89 trillion as market sentiment turned euphoric. The Fear & Greed Index reflected this enthusiasm, rising to levels that signified Extreme Greed.
Figure 1: The Bitcoin Fear and Greed Index is treading higher, now at Extreme Greed
Nevertheless, after breaking this psychological barrier and reaching a record high of over $103K, Bitcoin experienced a swift pullback, settling around $94K. This abrupt correction took many traders by surprise and resulted in one of the most significant liquidation events in cryptocurrency history. Data from Coinglass reveals that on the 9th of December, more than $1.5 billion in long positions were liquidated. In stark contrast, short position liquidations during the same period amounted to less than one-tenth of that figure, approximately $154 million, highlighting traders' overwhelming optimism.
Figure 2: Coinglass data showed over $1.5 billion in BTC long position liquidations earlier this week
In this edition of the Crypto Market Monitor, we delve into the key themes that shaped the cryptocurrency market in November and explore what December could bring for the sector.
The Dino Pump
November revealed an intriguing trend as several prominent altcoins from previous market cycles, often referred to as Dino coins, delivered remarkable price gains. Over the past 30 days, Stellar Lumens (XLM) surged by 260%, Cardano (ADA) increased by 97%, Ripple (XRP) rose by an impressive 280%, and Tron (TRX) climbed 68%.
But what triggered this unexpected rally? It began with XRP. During the lead-up to the presidential election, Trump pledged to appoint a crypto-friendly SEC chairperson if elected. Following the confirmation of Trump as the next US President, market sentiment shifted, with many believing that the SEC would likely drop its case against Ripple under the anticipated leadership of a pro-crypto chairperson.
XRP's price soared over 300% post-election, further driven by reports suggesting that its RLUSD stablecoin was close to receiving approval from the New York Department of Financial Services a development that was confirmed earlier this week. This surge in XRP revitalised retail interest in other altcoins from previous cycles, notably ADA, XLM, and TRX.
Altcoin Season
By late November, the altcoin market displayed notable strength. Over the past fortnight, altcoin dominance increased by over 4.3%, according to data from CoinGecko. The market capitalisation of altcoins climbed to over $1.85 billion, marking a 27% rise in the last 30 days. Among the key performers were Avalanche (+43%), Chainlink (+93%), Polkadot (+70%), Sui (+57%), Uniswap (+102%), Aave (+105%), and Polygon (+60%).
Memecoins also experienced broad gains over the past month. The Block's GMCI Meme Index, which tracks the leading meme coins by market capitalisation, celebrates the distinctive humour and culture integral to crypto and web3 communities. The index focuses on meme coins that have not only captured digital imagination but also demonstrated significant community engagement and market relevance. Over the past month, the index increased by approximately 27%, reflecting a surge in interest within the memecoins segment. However, despite the wider altcoin rally, interest in large-cap meme coins has waned over the past week, as indicated by the GMCI Meme Index declining by roughly 2% during this period.
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Figure 3: GMMEME Index – Top Meme Tokens (past one month)
Ending 2024 on a high?
Historically, Q4 has been a strong period for Bitcoin, with a median return of 57%, and this quarter's return currently stands at 58%. December, has delivered mixed outcomes, with Bitcoin’s median return for the month at just 0.17%. But this is an election year, and in the previous two election cycles, December returns exceeded 30% each time. If seasonal trends hold, December could bring further upside for Bitcoin.
That said, any potential gains in Bitcoin may need to be accompanied by a rise in the total cryptocurrency market capitalisation. Otherwise, Bitcoin dominance could increase, often at the expense of the broader altcoin market. This scenario might particularly impact Dino coins, which saw significant returns in November, as their performance is heavily reliant on sustained retail participation. Without this support, Dino coins may underperform relative to BTC, ETH, and other altcoins this month.
Another noteworthy trend from November was Ethereum outperforming Bitcoin, while Solana underperformed both. Ethereum saw substantial inflows into spot ETFs in the US, with post-election inflows hitting new weekly highs. Assets under management for these ETFs grew significantly, from $5.73 billion to $10.4 billion within a month, indicating robust institutional demand. However, Ethereum’s on-chain utility has been subdued due to persistently low fees. Encouragingly, the recent surge in Ethereum-based meme coins on Mainnet could revitalise on-chain activity. Additionally, renewed interest in NFTs, with prominent collections like Pudgy Penguins reaching new peaks, may further bolster Ethereum demand.
Conclusion
Stepping back from short-term market movements, it is crucial to focus on the broader picture. Bitcoin, once dismissed by mainstream media as a "dead" or fringe asset of cypherpunks and tech enthusiasts, has evolved into a recognised asset class. Today, it serves as a safe haven and hedge against inflation, with growing institutional adoption. Over 1.83% of Bitcoin’s circulating supply - worth more than $36 billion - is now held by publicly listed companies, underscoring its increasing prominence. This shift shows how Bitcoin has grown from a niche idea into a key player in the global financial landscape.
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Disclaimer
This document is provided by AMINA Bank AG (“AMINA”) and is intended for educational and informational purposes. AMINA’s weekly Crypto Market Monitor is not intended for distribution in any jurisdiction where such distribution would be prohibited. Furthermore, it is not aimed at any person or entity residing in such jurisdiction. It does not constitute an offer or a recommendation to subscribe, purchase, sell or hold any security or financial instrument. The document contains the opinions of AMINA as at the date of issue, which do not take into account an individual’s circumstances and objectives. AMINA does not make any representation that any investment or strategy is suitable or appropriate to individual circumstances or that any investment or strategy constitutes personalized investment advice. Some investment products and services may be subject to legal and regulatory restrictions or may not be available worldwide on an unrestricted basis. The information and analysis contained in this Crypto Market Monitor are based on sources considered as reliable. AMINA makes its best efforts to ensure the timeliness, accuracy, and comprehensiveness of the information contained in this document. Nevertheless, all information indicated herein may change without prior notice.
Head of Brand Strategy at Quranium
1wGreat read. Do you think that the news regarding Google’s Willow (and the fear of what the quantum era will have on blockchains using crackable encryptions) was responsible for $1.5 billion + of long positions being liquidated?