The period between Christmas and New Year's Day together with the first week of January could go down in the history of the crypto market.
The price of bitcoin presented in the US dollar rose in just three weeks from about 19 thousand USD to over 34 thousand USD. The ethereum price rose from about 650 USD to over 1100 USD. In turn, the litecoin rose from 100 USD to about 170 USD. It seems that there has been no such euphoria on this market since the end of 2017, when the price of BTC rose from about USD 1 thousand to the area of USD 20 thousand. It is worth noting that in March, during the biggest pandemic shock, the BTC was below USD 4 thousand, so the price of bitcoin has risen almost 10 times since then.
Such a powerful trend on the digital currency market may be related to the growing interest of institutional investors with a small supply of bitcoin. In December alone, the largest BTC Grayscale Bitcoin Trust fund bought three times as many bitcoins from the market as the miners managed to dig. In addition, VanEck, one of the world's largest distributors of ETFs with assets of nearly USD 50 billion, filed documents to the SEC for a bitcoin ETF. With the change of the SEC's chairman, the chances are growing that the fund will be admitted to trading this time. This could further increase the involvement of institutional investors in the described market.
Nevertheless, the risk of corrections increases with rapid inclines. This could mean increased volatility in the near future. This, in turn, could increase the risk for the digital currency market. On Monday morning, the BTC/USD exchange rate dropped almost to the level of USD 30 thousand from over USD 34 thousand, which means a correction of over 10%.
There are many indications that bitcoin together with altcoins started the new year just as Alfred Hitchcock believes a good thriller should look. The film should start with an earthquake and then the tension should continue to grow. This year it may be so with the digital currency market.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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