Bitcoin's $500K target in sight?

December 17, 2024

Reading time: 5 minutes

Bitcoin’s Rainbow Chart reignites hopes of $500K in this cycle

Key points:

  • Critical indicators and evolving market dynamics have bolstered the case for Bitcoin to chart new highs.

  • Institutional adoption and ETF inflows are fueling Bitcoin’s rise towards a potential supercycle.

News - Bitcoin’s rainbow chart has rekindled speculation of a $500K price peak this cycle, with recent developments pointing to a longer and more sustained trajectory, compared to previous market cycles.

Bitcoin’s rise towards a potential ‘supercycle’ is being fueled by significant institutional adoption, ETF inflows, favorable macroeconomic trends, and network growth. While the cryptocurrency continues to trail traditional assets, its rapid ascent from $67K to $104K in just 40 days has highlighted its growth potential.

In fact, since November, Bitcoin has increasingly gained legitimacy as a viable financial asset. It has attracted interest from sovereign wealth funds, pension funds, and other institutional investors.

A historical case study - Back in 2013 and 2017, each of Bitcoin’s parabolic price rallies breached the ‘Maximum Bubble’ territory on the rainbow chart.

On the contrary, in 2021, the price cycle diverged, with the same stalling in the ‘FOMO intensifies’ phase. At the time, major regulatory headwinds and speculative frenzy played a role.

Given the scale of institutional inflows across the board this time, Bitcoin’s price cycle might move into the ‘extreme phase’ in a more sustainable manner.

BlackRock’s iShares IBIT Bitcoin ETF, for instance, has seen inflows exceeding $17 billion - A clear sign of surging institutional demand for Bitcoin exposure.

A mainstream asset? - As we approach 2025, comparisons are being made between Bitcoin and Nvidia, with focus on which would be a better investment. Both have performed much better than the broader market over the last 12 months.

With President-elect Trump pitching a Bitcoin Reserve for the United States, it’s likely that the world’s largest cryptocurrency will soon find a long-term catalyst for its growth.

Crypto investment products record 10th successive week of inflows

 

Key points:

  • Total inflows for 2024 have risen to $44.5 billion.

  • Last 10 weeks alone account for over 40% of all inflows this year.

News - It’s been a good few weeks for the cryptocurrency market, with Bitcoin, the world’s largest cryptocurrency, breaching one ATH after the other. At the time of writing, BTC was trading close to its latest all-time high of $107,822.

Outside of the charts too, the market has been fairly bullish, with the same evidenced by the performance of crypto investment products over the last few months. In fact, according to CoinShares’ latest report, these products saw $3.2 billion in inflows between 9 and 13 December alone.

During the previous week, the inflows were as high as $3.85 billion.

Bitcoin vs Ethereum - CoinShares also found that during the aforementioned period, Bitcoin investment products accounted for a majority of the weekly inflows, with figures of over $2 billion.

BlackRock’s iShares Bitcoin ETF took the lead on this front, while the likes of Grayscale’s Bitcoin Trust saw outflows of over $145 million.

Like Bitcoin, Ethereum investment products have done pretty well over the last few weeks too. According to CoinShares, ETH ETPs have now hit their 7th successive week of inflows.

These ETPs recorded inflow figures of just over $1 billion over the past week.

Not universal at all - Here, it’s worth pointing out, however, that there were some demographic differences to be found when assessing the total inflows and outflows. The United States, for example, contributed to the cumulative figures with $3.1 billion in inflows.

On the contrary, Switzerland saw crypto ETP outflows of $19 million over the same period.

Dogecoin’s price diverges away from Bitcoin despite BTC’s new ATH

Key points:

  • Dogecoin and Bitcoin have historically been closely-linked during bullish market cycles.

  • Memecoin’s long-term market trend depends on a few key factors.

News - The world’s largest memecoin has historically enjoyed a strong correlation with Bitcoin, the world’s largest cryptocurrency. Ordinarily, DOGE follows BTC’s lead on the price charts. However, that hasn’t been the case this time, with the memecoin’s price diverging away from the direction BTC’s price seems to be taking.

At the time of writing, Bitcoin was trading close to its ATH of $107,822. For DOGE’s part, the memecoin did hit a yearly high of $0.45 a few days ago. While this was a level unseen since 2021, DOGE was unable to maintain its market momentum and soon registered losses.

Positive catalysts - Dogecoin hasn’t come close to breaching its 2021 ATH of $0.73 this year. However, it isn’t too far off either. The popular memecoin needs very specific catalysts to push it further up the charts.

At press time, DOGE was trading at $0.40. To finally overcome its resistance of $0.45, the altcoin must rely on retail interest, accompanied by significant trading volume across the board. Back in 2021, such interest was fueled by rumours about its potential use-cases and social media trends.

Broader macroeconomic updates like Donald Trump’s inauguration as U.S President could also have an impact on DOGE’s price.

Negative catalysts - On the other hand, there may be an equal risk of DOGE falling on the charts. Especially if it continues to decouple from Bitcoin’s price action.

Tightening monetary policy and sustained inflationary fears could also reduce investors’ appetite for speculative assets like memecoins.

Lido to phase out services on Polygon citing ‘limited user adoption’

Key points:

  • Entire phasing out process will be completed ‘over the coming months.’

  • Decision taken after a governance vote by LDO token holders.

News - Following an extensive “DAO forum discussion” and a governance vote, LDO holders have decided that the staking protocol Lido will discontinue its services on the Polygon network. During the vote in question, 99% of token holders voted in favour of the same.

The sunsetting process is likely to take a few months, with users given until 16 June 2025 to unstake their MATIC through the Lido on Polygon frontend.

Reasons behind the update - According to Lido, several factors have necessitated the winding down of the aforementioned operations. Among them - Limited user adoption, insufficient rewards, high maintenance requirements, and changing market dynamics.

According to a statement from Lido,

“Key challenge has been the shifting landscape of DeFi activity, particularly with increased focus on zkEVM solutions. This transition has led to reduced demand for liquid staking solutions on Polygon POS, affecting Lido on Polygon's potential as a foundational DeFi building block.”

Ethereum is the winner? - In the months ahead, the protocol and LDO token holders will be working towards refocusing on Ethereum. This change in strategy was underlined by the governance decisions of GOOSE and reGOOSE.

Here, it’s worth pointing out that similarly, Lido ceased operations on the Solana blockchain last year. At the time, it cited “unsustainable financials.”

Interesting facts

  • The very first block mined in Bitcoin, known as the "Genesis Block," contains a hidden message embedded in its code - "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks." This message is a timestamp of the block and a comment on the economic climate during the creation of Bitcoin.

  • Instead of a traditional whitepaper, Shiba Inu's creators released a playful and tongue-in-cheek "WoofPaper" to explain the project. It describes the token and its ecosystem in a lighthearted way, staying true to the meme nature of the coin.

  • Unlike Bitcoin, which has a hard supply cap of 21 million coins, Dogecoin has an inflationary model. It started with 100 billion coins in circulation and currently adds 5 billion new coins to the supply each year.

Top 3 coins of the day

XRP

Key points:

  • XRP was trading at $2.67, at press time.

  • Altcoin’s price surged by over 20% in the last 7 days.

What you should know:

After months of sideways movement, November finally saw XRP’s price action break out on the charts. December saw the crypto retain much of its bullish momentum, with the altcoin up by over 20% in the last 7 days alone. While Bitcoin’s new ATH beyond $107K and XRP’s correlation to it certainly helped the altcoin’s price action, so did the NYDFS’s regulatory approval of Ripple’s next stablecoin a few days ago. At the time of writing, the altcoin’s price candles were positioned above the moving average - A bullish finding. Similarly, XRP’s Chaikin Money Flow was close to 0.40 on the charts - A sign of positive capital inflows into the market.

AAVE

Key points:

  • At press time, AAVE was valued at $372.41.

  • The altcoin was one of the market’s biggest gainers this week.

What you should know:

Despite a failure to build on its market momentum, AAVE, at the time of writing, seemed to be holding on to its latest price level on the charts. Earlier in the week, the altcoin appreciated by over 45% in just three days. Soon after, however, correction ensued, with the crypto unable to breach its immediate resistance level. Even so, AAVE’s technical indicators flashed positive signals. For example - The Parabolic SAR’s dotted markers were positioned under the price candles and highlighted the market’s bullishness. The MACD line was well above the Signal Line too, with a bearish crossover looking unlikely in the near term.

PEPE

Key points:

  • PEPE, like most of the market’s memecoins, depreciated over the past week.

  • At press time, a long-term downtrend seemed unlikely for PEPE.

What you should know:

The last few weeks haven’t been especially positive for the market’s memecoins. While the likes of Bitcoin and Ethereum have continued to gain on the charts, memecoins have stalled somewhat. PEPE was no exception as after hiking by over 24% earlier in the month, the popular crypto fell by just under 11%. At the time of writing, the Bollinger Bands seemed to be closing in around the price candles - A sign of falling volatility. The position of PEPE’s 20 SMA was in line with the altcoin’s Relative Strength Index holding steady close to 60 too. This meant that the memecoin was neither oversold or overbought, at press time.

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