Market View
Bitcoin convincingly broke above its key $100,000 psychological level on December 4 (US evening), which market players had been anticipating for some time. The US elections accelerated the asset’s recent 45% appreciation since November 5, given the expectations surrounding the potential for more regulatory clarity with the next administration. CoinMetrics data indicates that average daily BTC spot volumes on global centralized exchanges increased by 81% in November over the previous three months. Indeed, President-elect Donald Trump this week nominated former SEC commissioner Paul Atkins (a familiar crypto advocate) to chair the executive agency and replace Gary Gensler – a decision which received an endorsement from current SEC commissioner Hester Peirce.
Still, we think technical factors were behind the move higher, such as the unprecedented buying spree from publicly-traded firms like MicroStrategy and MARA Holdings. For example, between November 25 and December 1, MicroStrategy sold 3.7 million shares of its stock and used the funds to make its fourth major weekly purchase of bitcoin. This recently acquired 15.4k BTC (US$1.5 billion) has brought MicroStrategy’s total holdings to around 402k BTC ($40 billion). Meanwhile, MARA Holdings (formerly Marathon Digital) acquired around 6.5k BTC ($618M) between October 1 and November 30, according to their SEC filing, with the intent to raise another $700M to repurchase some existing convertible notes ($50M) and then buy more bitcoin. MARA holds close to 35k BTC.
Meanwhile, bitcoin’s beta to the COIN50 index - a measure of bitcoin’s sensitivity to the broader market moves in the asset class - has declined following the US Thanksgiving holidays to 0.54, indicating that bitcoin currently only moves 0.54% for every 1.00% change in the overall crypto market. See Chart 1. This seems consistent with the recent fall in bitcoin dominance to 56%, as a number of altcoins have rallied significantly in recent days. Part of that has had to do with about nine new spot crypto ETF applications filed in the last two months (for a total of 16 outstanding) for single-name funds covering XRP, SOL, HBAR and LTC.
Looking ahead, the nonfarm payrolls report for November (release date: December 6 at 8:30am ET) could be an important determinant for the Federal Reserve decision later this month, particularly after the JOLTs job openings figure (for October) came in at 7.74M – above the median Bloomberg survey expectation of 7.52M. Nevertheless, Fed Governor Chris Waller – once an identified hawk on the board – recently hinted that a 25bps cut is still the most likely scenario on December 18. Separately, Fed Chair Jerome Powell's remark that he believes bitcoin competes with gold rather than the US dollar has amplified the conversation around bitcoin, drawing more attention to the asset class.
Continued strength in bitcoin and other crypto majors has also supported heightened onchain activity in nearly all areas. Aggregate decentralized exchange (DEX) volumes have risen 78% in the past week from $10.4B on November 28 to $18.5B on December 4. Stablecoin borrowing and lending rates have also surged, reaching 10-20% annualized on Aave and Compound across nearly all of their deployed networks including Ethereum and Base. Indeed, the total value locked (TVL) for lending protocols has reached all time highs this past week of $54B, surpassing the previous bull cycle high of $52B.
Meanwhile, the total stablecoin market cap continues to reach new all time highs and is now at $196B, up from $189B on November 28. We think this represents a new influx of capital into the space looking to capitalize on elevated lending rates (more than three fold higher than long term bond yields) or searching for higher beta trades onchain. The recent attention around HyperLiquid’s airdrops and the launch of new AI agent protocols, for example, have been limited to onchain users.
