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On December 9, Bitcoin [BTC] rose to $94,000, almost breaking this local resistance. Bitcoin was forced to lose 2.25% in 13 hours, trading at $92.5k at the time of writing, after the bulls’ rapid advance was halted.
This withdrawal went against the grain retail expectations of a sustained rally, as Santiment revealed based on social media engagement. At the same time, Bitcoin ETFs registered $151.9 million in inflowswhich reflects this trust.
The FOMC meeting on December 10 is expected to conclude with an announcement of another rate cut. That of the CME group FedWatch tool shows an 87.6% probability of a 25 basis point rate cut. The crypto market could price this in.
Some called this step “pure manipulation“It is impossible to prove this claim, but we can measure its impact.
MintGlass reported that traders liquidated $420.5 million in positions in the last 24 hours. Of this, $311 million came from short positions, indicating a liquidity rush ahead of the release of key economic data.
In one post on X (formerly Twitter)Research from Coinbase shows that the systemic leverage ratio has stabilized at around 4%-5% of the total market capitalization. It is down from the 10% it was in the summer.
The abundance of speculative interest has given room for ‘cautious optimism’. The market is healthier and less vulnerable to sudden, sharp declines.
Banks as crypto intermediaries, Twenty One Capital and ETF flows
On December 9, the US Office of the Comptroller of the Coin said in a statement interpretive letter that banks can mediate crypto transactions. They would be risk-free clients who do not have any cryptocurrency on their balance sheet.
This move would allow customers to trade crypto assets through a regulated bank, compared to unregulated options, the OCC wrote.
In other news, Twenty-one capital [XII] made its debut on the New York Stock Exchange on December 9.
The company owns 43,500 BTC, worth approximately $3.9 billion third largest business holder of Bitcoin. It is right behind MicroStrategy [MSTR] and MARA Holdings [MARA].
It had a rough first session, dropping 20% on its first day of trading. Founder and CEO Jack Mallers told CNBC that it is not just a treasury company.
They worked to launch Bitcoin products with the intention of generating cash flow.
It remains to be seen whether investors spooked by Bitcoin’s price action may need more reassurance to buy XXI stock.
Final thoughts
- Bitcoin’s rally to $94,000 and subsequent reset sparked short liquidations in the cryptosphere, leading to $310 million in short liquidations.
- The news that banks can mediate crypto transactions was one of the highlights.