At the beginning of the week, Bitcoin opened trading at the US$42,000 level but faced a surge in take-profit and sell orders, resulting in widespread market liquidations following its recent peak at US$44,700. The market witnessed a tug-of-war between bulls and bears, with sell-offs on Tuesday and Wednesday, causing BTC to dip to the US$40,000 mark ahead of the US interest rate decision.
After the Federal Reserve maintained steady rates and hinted at possible rate cuts in the coming year, Bitcoin quickly rebounded to the US$43,000 level on Thursday. The US Financial Accounting Standards Board (FASB) further contributed to the market boost by introducing new accounting regulations mandating companies like MicroStrategy, Tesla, and Block to assess their cryptocurrency holdings at fair value. Effective in 2025, these rules allow businesses to monitor real-time fluctuations in asset values.
Currently, BTC is consolidating at the US$42,000 level, showing a 36% decline from its peak but boasting a remarkable 159% year-to-date gain. Key resistance levels are identified at US$43,200 and US$43,500, while support stands at US$41,200, indicating an overall bullish sentiment. In tandem with BTC, Ethereum reflects similar profit and loss trends. Despite being down 52% from its all-time high, Ethereum has gained 12% month-to-date and 91% year-to-date.
In a noteworthy development, El Salvador granted regulatory approval for the world’s first Bitcoin bonds, underscoring the evolving landscape of digital finance. This move reaffirms El Salvador’s commitment to integrating Bitcoin into its economic infrastructure following its decision to adopt Bitcoin as legal tender in September 2021. The approval of Bitcoin bonds signals a growing acceptance of cryptocurrencies as legitimate financial instruments, potentially attracting capital from individuals and institutions seeking portfolio diversification and exposure to Bitcoin’s upside. As the crypto market matures, other jurisdictions may explore similar initiatives, with regulatory frameworks shaping the future of these financial instruments. Investors should closely monitor these developments for insights into the potential convergence of traditional and digital finance globally.
Looking ahead, a significant event scheduled for the next year is the Bitcoin Halving in April 2024. This event, occurring every four years, involves halving miners’ rewards to control the introduction of new Bitcoins, contributing to Bitcoin’s deflationary nature. Historical trends from 2012, 2016, and 2020 indicate that Bitcoin Halving precedes a price increase leading up to the event and in the following months. Another anticipated development in the upcoming year is the potential approval of spot Bitcoin Exchange-Traded Funds (ETFs). This regulatory milestone could have profound implications for the cryptocurrency market, offering investors direct and regulated exposure to Bitcoin. Approval of spot Bitcoin ETFs may mark a pivotal moment in the financial landscape, attracting a broader range of investors and contributing to the mainstream acceptance of cryptocurrencies.
Coming to the price action, among the top 100 cryptos by market cap, here are the best and worst-performing cryptos over the past week: As per prices on Friday.
Top 5 crypto gainers during the week:
1. BONK is up by 140%
2. Injective is up by 73%
3. Osmosis is up by 60%
4. Beam is up by 58%
5. WOO Network is up by 49%
Top 5 crypto losers this week:
1. Terra Classic is down by 14%
2. Sei is down by 12%
3. THORChain is down by 10%
4. RocketPool is down by 10%
5. Pepe is down by 8%
(The author is Mr. Edul Patel, CEO and Co-founder of Mudrex, a Global Crypto Investment Platform.)
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