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

Author: Ben Strack, Blockworks; Translation: Wu Zhu, Golden Finance

As you know, November is a eventful month for cryptocurrencies - driven by the election victory of Donald Trump.

CoinGlass data shows that Bitcoin rose by 37.3% last month. This is the best performance of the asset since November 2020 (the month with the highest average return rate of Bitcoin, at 46%), when Bitcoin rose by 43%.

Looking ahead, December is not the best month for BTC historically (with an average return of +4.9%). In December 2020 (also after the presidential election), the price of Bitcoin rose by 47%; but from 2021 to 2023, the returns on this asset were -18.9%, -3.6%, and +12.2% respectively.

Bitcoin has been unable to break through the $100,000 level, with some analysts attributing it to profit-taking by investors and resistance from traders hedging against potential downside with put options.

Jeff Embry, Managing Director of the crypto hedge fund Globe 3 Capital, pointed out that he does not believe the specific developments this month will affect the crypto market. Instead, he predicts that the demand for cryptocurrencies stimulated by the United States will "fully continue" from November onwards, "freeing innovators, risk takers, and investors from constraints and telling them 'we support you now'".

"Before November, the latest peak of BTC and ETH was in mid-March," he explained. "This is an eight-month consolidation period in the bull market, so the market is ready to welcome a catalyst to push new highs, and the November elections provide this catalyst in a huge way."

Globe 3 Capital's year-end BTC price forecast (announced at the beginning of 2024) is $124,000 - Embry says the company has always stuck to this number. Some others point out that $80,000 is the support level in case of a pullback.

“Of course, higher prices depend on higher demand, and we see comprehensive demand from retail investors, [high net worth individuals], institutions, sovereign wealth funds, and governments themselves,” Embry added.

We saw many companies buying Bitcoin in November to exchange for government bonds. This situation seems to continue.

A document submitted on Monday showed that from November 25th to December 1st, MicroStrategy purchased approximately 15 billion U.S. dollars in cash to buy 15,400 bitcoins. Bitcoin miner Marathon Digital (also today) revealed that it plans to issue $700 million in convertible preferred notes, the proceeds of which will be primarily used to purchase more bitcoins.

MicroStrategy founder Michael Saylor shared a video explaining why Microsoft should hold Bitcoin on its balance sheet. This proposal was put on the agenda at the shareholder meeting on December 10th; although the board recommended voting against it (noting that it had already considered the issue), it is worth paying attention to.

Then there is the Fed's interest rate decision on December 18th. Multiple market odds indicate that the market expects a 25 basis point rate cut (67% probability). Rate cuts have historically been beneficial for risk assets such as Bitcoin.

Finally, the industry continues to wait for clarity on the possibility of a Bitcoin strategic reserve in the United States. As Embry pointed out, the government's interest in this could lead to more countries doing the same.

However, analysts at Compass Point Research & Trading believe that the likelihood of the "BITCOIN Act" proposed by Senator Cynthia Lummis becoming law is less than 10%.

"We do not expect the Republican-controlled Congress to appropriate money for this purpose; they will focus on expiring tax provisions and the federal budget," Joe Flynn and Ed Groshans wrote. "The primary challenge this action will encounter is deficit financing for Bitcoin purchases."

They added that although Trump could issue an executive order (perhaps establishing a sub-account in the ordinary fund of the Treasury Department), future administrations may revoke this action.

What is the bottom line? As the weather gets colder for many of us, the story of cryptocurrency is also heating up.