BTC recorded its best November performance in four years. What else should we pay attention to in December?

Author: Ben Strack, Blockworks; Translated by: Wuzhu, Golden Finance

As you know, November was an eventful month for cryptocurrencies - driven by Donald Trump's election victory.

CoinGlass data shows that Bitcoin rose 37.3% last month. This was the asset's best performance in November since 2020 (Bitcoin's highest average return month, at 46%), when Bitcoin rose 43%.

Looking ahead, December was not the best month historically for BTC (with an average return of +4.9%). In December 2020 (also following the presidential election), Bitcoin prices rose 47%; but from 2021 to 2023, the asset has returned -18.9%, -3.6%, and +12.2%, respectively.

Bitcoin has been unable to break through the $100,000 level, which some analysts attribute to profit-taking by investors and resistance caused by put options as traders hedge against a possible decline.

Jeff Embry, managing director of crypto hedge fund Globe 3 Capital, noted that he does not expect specific developments this month to affect crypto markets. Instead, he predicts a “full continuation” of U.S.-stimulated cryptocurrency demand starting in November, “unleashing innovators, risk takers, and investors and saying ‘we’ve got your back now.’” “Prior to November, the last peak for both BTC and ETH was in mid-March,” he explained. “That was an eight-month consolidation period in the bull market, so the market was ready for a catalyst to push to new highs, and the November election provided that catalyst in a huge way.” Globe 3 Capital’s year-end BTC price prediction (announced in early 2024) is $124,000 — a figure Embry says the firm is sticking with. Others point to $80,000 as support in the event of a retracement.

“Higher prices, of course, depend on higher demand, and we’re seeing demand across the board from retail investors, [high net worth individuals], institutions, sovereign wealth funds and governments themselves,” Embry added.

We certainly saw a lot of examples in November of companies buying bitcoin in exchange for Treasuries. That looks set to continue.

MicroStrategy purchased 15,400 bitcoins for about $1.5 billion in cash between Nov. 25 and Dec. 1, according to a filing Monday. Bitcoin miner Marathon Digital revealed (also today) that it intends to issue $700 million in convertible senior notes — the proceeds will be primarily used to buy more Bitcoin.

MicroStrategy founder Michael Saylor shared a video explaining why Microsoft should hold Bitcoin on its balance sheet. Such a proposal is on the table at the December 10 shareholder meeting; while the board recommended a vote against it (noting that it had already considered the issue), it’s something to watch.

Then there is the Federal Reserve’s Dec. 18 rate decision. Multiple market odds suggest the market is expecting a 25 basis point rate cut (67% probability). Rate cuts have historically been bullish for risk assets like Bitcoin.

Finally, the industry continues to await clarity on a possible U.S. strategic reserve of Bitcoin. To Embry’s point that the government is showing interest, U.S. support for it could lead to more countries doing the same.

But analysts at Compass Point Research & Trading give the BITCOIN Act, introduced by Senator Cynthia Lummis, less than a 10% chance of becoming law.

“We expect that the Republican-controlled Congress will not appropriate funds for this purpose, as they will focus on expiring tax provisions and the federal budget,” Joe Flynn and Ed Groshans wrote. “The primary challenge this action would encounter is the deficit financing of bitcoin purchases.”

They added that while Trump could issue an executive order (perhaps setting up a subaccount in the Treasury’s general fund), a future administration could reverse the action.

The bottom line? As the weather gets colder for many of us, the cryptocurrency story continues to heat up.