On the 9th of December, Bitcoin [BTC] rallied to $94k, nearly breaking past this local resistance. Bitcoin was forced to recede 2.25% in 13 hours, trading at $92.5k at press time, after the bulls’ quick advance was brought to a halt.
This pullback went against the retail expectations of a continued rally, as Santiment revealed based on social media engagement. At the same time, Bitcoin ETFs recorded $151.9 million in inflows, reflecting this confidence.
The FOMC meeting on the 10th of December is expected to conclude with an announcement of another rate cut. The CME Group’s FedWatch Tool shows an 87.6% probability of a 25 bps rate cut. The crypto market might be pricing this in.
Some called this move “pure manipulation“. It is impossible to prove this claim, but we can measure its impact.
CoinGlass reported that traders liquidated $420.5 million in positions over the past 24 hours. Of this, $311 million came from shorts, suggesting a liquidity hunt ahead of key economic data releases.
In a post on X (formerly Twitter), Coinbase showed that the systemic leverage ratio has stabilized around 4%-5% of the total market cap. It is down from 10% which it had been in the summer.
The flush of the excess speculative interest has given space for “cautious optimism”. The market is healthier and less vulnerable to sudden, sharp drawdowns.
Banks as crypto intermediates, Twenty One Capital, and ETF flows
On the 9th of December, the U.S. Office of the Comptroller of the Currency said in an interpretive letter that banks can intermediate crypto transactions. They would be riskless principals who hold no crypto on their balance sheets.
This move would allow customers to transact crypto assets through a regulated bank, as compared to non-regulated options, the OCC wrote.
In other news, Twenty One Capital [XII] made its debut on the New York Stock Exchange on the 9th of December.
The company holds 43,500 BTC, valued at about $3.9 billion, making it the third-largest corporate holder of Bitcoin. It ranks just behind MicroStrategy [MSTR] and MARA Holdings [MARA].
It had a rough first session, falling 20% on the first day of trading. Founder and CEO Jack Mallers told CNBC that it is not just a treasury company.
They were working on bringing Bitcoin products to the market with the intent to have a cash flow.
It remains to be seen if investors spooked by the Bitcoin price action might need more reassurance to buy XXI shares.
Final Thoughts
- The Bitcoin rally to $94k and subsequent reset hunted down short liquidations across the crypto sphere, triggering $310 million in short liquidations.
- The news that banks can intermediate crypto transactions was one of the highlights.