On December 5, Bitcoin achieved a historic milestone, surpassing the $100,000 threshold for the first time. The total market capitalization of cryptocurrencies surged beyond $3.89 trillion as market sentiment turned euphoric. The Fear & Greed Index reflected this enthusiasm, rising to levels that signified 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 surprised many traders and resulted in one of the most significant liquidation events in cryptocurrency history. Data from Coinglass reveals that on December 9, more than $1.5 billion in long positions were liquidated. In stark contrast, short position liquidations during the same period amounted to less than $154 million, highlighting traders' overwhelming optimism. Bitcoin has since recovered to new highs.
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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 his confirmation as the next U.S. 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 confirmed earlier this week. This surge in XRP revitalized 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 capitalization 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 capitalization, reflects the distinctive humor and culture integral to crypto communities. Over the past month, the index increased by approximately 27%. However, despite the wider altcoin rally, interest in large-cap meme coins has waned over the past week, with the GMCI Meme Index declining by roughly 2% during this period.
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%. However, in previous election years, December returns exceeded 30%. If seasonal trends hold, December could bring further upside for Bitcoin.
That said, potential gains in Bitcoin may need to be accompanied by a rise in the total cryptocurrency market capitalization. Otherwise, Bitcoin dominance could increase, often at the expense of the broader altcoin market. Dino coins, which saw significant returns in November, may underperform relative to BTC, ETH, and other altcoins without sustained retail participation.
Another noteworthy trend from November was Ethereum outperforming Bitcoin, while Solana underperformed both. Ethereum saw substantial inflows into spot ETFs in the U.S., 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 revitalize 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, has evolved into a recognized 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 highlights Bitcoin's journey from a niche idea to a key player in the global financial landscape.
