Another week on the cryptocurrency market is behind us. It was full of emotions and dramatic plot twists. Here’s another summary of the last few days, prepared by Sebastian Seliga from the zondacrypto exchange.
Bitcoin reaches new ATH
Bitcoin once again proved its dominance in the cryptocurrency market, reaching a new all-time high of USD 108,832 (PLN 438,000) on the zondacrypto exchange. This historic event has attracted the attention of both retail and institutional investors, who are becoming increasingly involved in the cryptocurrency market. This growth is the result of several key factors that collectively drive demand for the world’s largest cryptocurrency.
One of the main drivers of growth is strong demand momentum. Both individual and institutional investors are increasing their involvement in Bitcoin, seeing it as a safe haven in the face of global economic uncertainty. Increased interest from hedge funds, technology companies and investment banks is further fueling this trend.
Another factor is optimistic forecasts for 2025. Analysts like those at VanEck predict that the price of bitcoin could reach as high as 180,000 next year. Such forecasts reinforce investors’ belief that bitcoin remains one of the most promising assets on the market.
We also cannot forget about macroeconomic tensions that increase interest in bitcoin as “digital gold”. In the face of rising inflation, fiat currency instability and geopolitical tensions, bitcoin is becoming increasingly attractive as an alternative form of store of value.
However, the euphoria did not last long. At the end of the week, the rate fell by 13.5%, which was a reaction to the chaos caused by the Fed’s decision. Still, many analysts believe this correction is healthy and could represent a buying opportunity for long-term investors.
The Fed’s decision and the historical record of the US stock market
The US Fed decided to reduce interest rates by 25 basis points, which caused mixed reactions in financial markets. Although this decision was in line with expectations, the accompanying hawkish forecasts caused panic among investors. The Fed has said that inflation will remain elevated in the coming years and interest rates will be structurally higher, which has resulted in a sell-off of risky assets.
The Fed’s forecasts for 2025 indicate economic growth of 2.1% and a drop in unemployment to 4.3% (previously forecasted to be 4.4%). Still, investors fear that higher interest rates could reduce the availability of capital and slow economic growth. As a result, stock markets recorded the biggest declines in months.
Despite the short-term sell-off, the U.S. stock market has hit an all-time high, reaching a value of around $64 trillion. That’s more than the combined value of all other stock markets in the world, which are valued at around $61 trillion. US dominance in the global financial market remains unchallenged, attracting further institutional investment.
However, the market reaction to the Fed’s decision was violent. Indexes such as the S&P 500 (-3.0%), Nasdaq (-3.6%) and Russell 2000 (-4.7%) recorded significant declines. Bitcoin also felt the effects of this decision, losing 5.5% of its value in a matter of hours.
Fed Chairman Jerome Powell, when asked about the possibility of holding reserves in bitcoin, replied:
We cannot hold bitcoin and we do not intend to change the law in this regard.
His comment highlights central banks’ distance from cryptocurrencies, despite their growing popularity among investors.
Mt. Gox and the transfer of USD 172.5 million in Bitcoin
The collapsed cryptocurrency exchange Mt. Gox is back in the spotlight after she transferred $172.5 million worth of bitcoin to an anonymous wallet. The transaction took place less than 24 hours after BTC reached its new ATH, sparking a wave of speculation among investors and analysts.
One of the main topics of discussion is the question whether this transfer is related to preparations for payments to the exchange’s creditors. Mt. Gox, which went bankrupt in 2014, has been working on returning funds to its customers for years. If this transfer is indeed part of the payout process, it could mean that creditors will soon get their funds back.
Another possibility is that the transaction was related to the OTC (over-the-counter) market. These types of transactions are often used by institutions and whales to move large amounts of cryptocurrencies without affecting the market. However, the lack of transparency on this matter raises concerns among investors.
The impact on the market was limited, but many analysts are concerned about potential sales pressure. If Bitcoins from Mt. Gox will be listed on stock exchanges, this may cause a short-term price correction. However, it is worth noting that the cryptocurrency market is now much more liquid than in 2014, which may mitigate the effects of such sales.
This event reminds investors of the risks associated with storing cryptocurrencies on exchanges. Many people emphasize the importance of using hardware wallets and other secure methods of storing digital assets.
Ethereum: Whales Control a Record 57% of Supply
According to data from the Santiment analytics platform, Ethereum whale wallets have reached an all-time high, controlling as much as 57% of the total ETH supply. This phenomenon raises mixed feelings among investors because it can have both positive and negative consequences for the market.
The increasing concentration of ETH in the hands of large players may increase price volatility. Whales have the ability to influence the market through massive purchases or sales, which can lead to wild price fluctuations. This is a cause for concern for smaller investors, as their positions can easily be dominated by the actions of large players.
On the other hand, the concentration of ETH in the hands of whales may indicate their long-term confidence in the project. Whales often invest in assets that they consider valuable in the long term, which can be a positive signal for the market.
The price of ETH remains above $3,000, a result of both increasing demand and limited supply in the market. There are many indications that ETH has the potential for further growth in 2025, especially in the context of growing interest in blockchain technology and decentralized applications.
It is also worth noting that Ethereum plays a key role in the DeFi (decentralized finance) and NFT (non-fungible tokens) ecosystem. These sectors continue to grow, which could further increase demand for ETH in the coming years.
Chrystia Freeland resigns as Canada’s finance minister
Chrystia Freeland, Canada’s deputy prime minister and minister of finance, announced her resignation after being offered “another position” in the government. Her decision triggered a wave of speculation about the future of Canada’s economic policy, especially in the context of cryptocurrency regulation.
Freeland was a key figure in shaping Canada’s economic policy, and her departure could impact the country’s approach to financial innovation. Canada was one of the first countries to introduce cryptocurrency regulations, making it a leader in the field.
Her resignation could also affect Canada’s relationship with international financial institutions. Freeland was known for her active participation in global discussions on cryptocurrency regulation and blockchain technology.
Some analysts believe her departure could open the door to more progressive politicians who will support the continued development of Canada’s cryptocurrency sector. But others fear that the lack of strong leadership in this field could slow progress on regulation and innovation.
Canada remains one of the key players in the global cryptocurrency market, and the future of its policy in this area will have a significant impact on the development of the entire sector.
MicroStrategy in the Nasdaq-100
MicroStrategy, known for having huge bitcoin reserves, has been added to the prestigious Nasdaq-100 index. This event is seen as another step towards institutional acceptance of cryptocurrencies and their integration into traditional financial markets.
MicroStrategy has been building its position as a leader in bitcoin adoption among public companies for years. Its founder and CEO, Michael Saylor, is one of the most famous cryptocurrency advocates, and his BTC purchasing strategy has attracted the attention of investors around the world.
The addition of MicroStrategy to the Nasdaq-100 also sends a signal to other companies that investing in cryptocurrencies can be viewed as a strategic business move. This event may encourage other companies to consider similar actions, which in turn will increase demand for Bitcoin.
However, some analysts suggest that MicroStrategy may be reclassified as a financial company due to its dependence on BTC. Such a change could impact the way the company is perceived by investors and regulators.
Still, MicroStrategy’s addition to the Nasdaq-100 is an important step towards further adoption of cryptocurrencies by institutions and traditional financial markets. This event shows that cryptocurrencies are becoming more and more accepted as full-fledged investment assets.
Poland and MiCA – a race against time
Poland is among the six European Union countries that have not yet adapted their law to the MiCA (Markets in Crypto-Assets) regulation. The deadline for implementing these regulations is December 30, 2024, which puts our country in a difficult situation.
MiCA is a comprehensive set of regulations aimed at harmonizing the rules on cryptocurrencies across the European Union. Its aim is to ensure greater transparency, investor protection and market stability. Failure to implement these regulations may affect the development of the cryptocurrency market in Poland, limiting access to new projects and investors.
Poland, as one of the largest markets in Central and Eastern Europe, has huge potential in the cryptocurrency sector. However, the lack of clear regulations may discourage both local and international investors from engaging in the Polish market.
Some experts believe that delays in the implementation of MiCA result from the lack of appropriate resources and knowledge in Polish regulatory institutions. Others point to the lack of political will to introduce changes that may be perceived as controversial.
If Poland does not adapt to the MiCA regulations on time, it may result in sanctions from the European Union and loss of competitiveness on the cryptocurrency market. Therefore, it will be crucial for the Polish authorities to take quick action to implement these regulations.
Summary
Last week was full of emotions and key events that may affect the market in the long run. Bitcoin and ether remain the leaders, but altcoins, regulations and macroeconomic decisions also play an important role.
