XRP searches to the moon?

December 19, 2024

Reading time: 5 minutes

Fed’s hawkish tone pushes Bitcoin below $103K despite long-term optimism

Key points:

  • Bitfinex analysts predict Bitcoin could reach $200,000 by mid-2025 under favorable conditions.

  • Fed's rate cut and inflation outlook heightened Bitcoin's short-term volatility and market sensitivity.

News - Bitcoin's price trajectory for 2025 appears promising, with analysts at Bitfinex forecasting significant growth fueled by strong institutional demand.

In their latest market report, they predicted Bitcoin could see a best-case scenario of doubling its current value by mid-year, with the price potentially ranging from $145,000 to $200,000 under favorable conditions.

Despite anticipated volatility in the first quarter, the broader trend points to sustained upward momentum, driven by increasing institutional adoption and inflows into spot Bitcoin exchange-traded funds (ETFs).

How has FOMC affected Bitcoin? -This coincided with the Federal Reserve's rate decision, where, after reaching an all-time high of $108,000, Bitcoin saw a decline to $103,000 just hours before the FOMC meeting. Before the meeting, the market had already priced in a 25bps rate cut.

However, expectations of a 'hawkish tone,' driven by persistent U.S. inflation, raised concerns about the Fed’s policy outlook for 2025. In addition to the bearish sentiment, Bitcoin’s chart revealed a potential reversal signal, hinting at a possible short-term downturn in the market.

Way forward - Finally, despite expectations aligning with the rate reduction, Jerome Powell's cautious position on further cuts and his 2025 inflation outlook rattled investors.

This uncertainty, compounded by economic policy changes anticipated under the incoming Trump administration, has amplified market volatility. Analysts believe Bitcoin’s ability to reclaim the critical $100,000–$101,400 zone will be pivotal for stabilizing its price trajectory.

XRP search metrics briefly hit 100 on the back of latest price rally

Key points:

  • XRP hit an all-time high of 100 on Google Trends during its price rally.

  • Anticipated RLUSD stablecoin launch and ETF discussions sustain market optimism for XRP.

News - While Bitcoin captured global attention with its historic rally to $108,000, XRP emerged as a standout in the crypto landscape. In fact, the altcoin hit an all-time high in search popularity, achieving a perfect score of 100 on Google Trends.

What led to the XRP search surge? - Between 1 and 7 December, XRP’s search popularity skyrocketed to an all-time high of 100, a significant leap from last week’s score of 42. This surge seemed to be in line with XRP’s price rally near $3 and its market cap briefly surpassing $150 billion, solidifying its rank as the third-largest cryptocurrency globally.

However, this excitement proved short-lived. XRP’s Google Trends score had fallen to 47 at press time, reflecting a decline in public attention as its price began to stabilize. This pattern suggested that the surge in interest was largely tied to the rally, rather than sustained market momentum.

Room for growth amid shifts - XRP’s latest dip to $2.37, following a 6.31% 24-hour decline, did not dampen the broader market optimism surrounding the token though. Key developments, such as the anticipated launch of the RLUSD stablecoin, have fueled investor interest, while discussions around XRP-affiliated ETFs continues to sustain enthusiasm.

Base scripts history, outperforms Ethereum mainnet for first time

Key points:

  • Base surpassed Ethereum Mainnet in daily transaction volume.

  • Strong growth has been driven by Coinbase’s user base and organic adoption.

News - In a groundbreaking achievement, Base, Coinbase’s Layer 2 blockchain, surpassed Ethereum Mainnet in daily transaction volume—A first in its history. Additionally, with over $4 billion in total value locked (TVL) and impressive user retention, Base seems to be positioning itself as a dominant force, reshaping the dynamics of the Ethereum ecosystem.

Growth so far - As expected, Base’s historic milestone of processing more transactions than Ethereum Mainnet marks a significant turning point in the blockchain landscape. As a Layer 2 solution, Base has demonstrated that it can outperform the network it was built on, highlighting its ability to drive organic adoption and scalability.

In a way, this achievement highlights the growing importance of Layer 2 solutions and signals a major shift for investors and developers alike.

What should investors expect? - In light of the upcoming launch of five new superchains to enhance interoperability, Base is poised to lead in scaling Ethereum’s capabilities. For investors, this growth can be interpreted to mean a pivotal shift towards Layer 2 dominance, offering both opportunities and risks.

Therefore, as Base continues to expand, closely monitoring its trajectory will be essential for navigating the evolving blockchain ecosystem.

Aave, Polygon clash over stablecoin yield strategies in DeFi ecosystem

Key points:

  • Stani Kulechov supported the proposal to remove Polygon support from Aave.

  • Concerns were raised over safety risks and decentralized incentives in Polygon’s proposal.

News - Stani Kulechov, Founder and CEO of Avara, recently supported a proposal to remove support for Polygon markets from the Aave platform. This move followed an early-stage Polygon Improvement Proposal (PIP) from Allez Labs and Morpho, which introduced the idea of leveraging stablecoins in Polygon’s proof-of-stake Portal bridge to generate yield.

Concerns surrounding the proposal - According to Kulechov, the proposed Polygon Improvement Proposal has raised significant safety concerns for Aave, emphasizing the potential risks associated with bridge exploits that have led to significant financial losses in decentralized finance. In fact, he highlighted incidents such as the $100-million Harmony Horizon bridge hack in June 2022 as a cautionary example.

Following this, Aave chain Founder Marc Zeller submitted a proposal on 13 December, advocating for adjustments to risk parameters on Aave v2 and v3 within the Polygon network. Zeller’s suggestion aims to discourage Polygon users from utilizing Aave, with the long-term goal of ending support for the network altogether.

Way forward - Polygon founder Sandeep Nailwal responded to Aave’s proposal on social media, labelling the move as “monopolistic.” Nailwal pointed out that Aave had previously submitted a similar pre-PIP to utilize stablecoins in the Polygon proof-of-stake bridge for generating yield.

Initially, Aave expressed strong interest in offering yield-bearing opportunities for the substantial $1.3 billion in stablecoins within the Polygon Bridge. However, Nailwal claimed that despite facing community resistance, the Morpho proposal provided more decentralized incentives, fostering project development within the Polygon ecosystem.

This seemed to be in contrast with Aave’s proposal, which struggled to gain comparable traction among Polygon users.

Interesting facts

  • Estonia leads in blockchain-powered governance, using it for digital IDs, public services, and secure data sharing. Its X-Road system ensures decentralized connectivity, while KSI Blockchain safeguards government databases. The e-Residency program enables global entrepreneurs to establish EU businesses, saving Estonia 2% of the GDP annually.

  • Over the last 12 months, the number of crypto millionaires has nearly doubled, driven by a significant rise in the value of leading cryptocurrencies. As of 1 July, 2024, approximately 172,300 individuals globally hold over $1 million in crypto assets, representing a 95% hike compared to the previous year, according to Henley & Partners.

  • Despite the 2021 government ban on cryptocurrency activities, China still has a major share in the Bitcoin mining sector. By 2020, China accounted for approximately 65% of the global Bitcoin hash rate, underscoring its dominance in mining operations. As of December 2024, Chinese mining pools controlled around 55% of the Bitcoin network's hash rate.

Top 3 coins of the day

Avalanche (AVAX)

Key points:

  • AVAX was trading at $42.48, at press time

  • Altcoin showed signs of strong volatility on the charts.

What you should know:

AVAX has been on a downtrend over the last 24 hours and the previous week too, reflecting the broader market decline. Trading at $42.48 at press time, AVAX recorded a 9.04% fall in the last 24 hours. This bearish momentum was supported by the MACD indicator, which remained below the Signal Line and flashed red histograms - A sign of stronger selling pressure. However, a closer examination revealed a decline in trading volume, indicating that seller activity has been weakening—A potentially bullish sign for the altcoin. Thus, if AVAX can break above the resistance level at $45.80, it could fuel a bullish rally.

Shiba Inu (SHIB)

Key points:

  • At press time, SHIB was trading at $0.00002428.

  • Altcoin recorded a double-digit loss of 15.92% over the past week.

What you should know:

The dog-themed memecoin, SHIB, mirrored the broader market trend, trading at $0.00002428 after a 6.03% decline over the last 24 hours, making it one of the biggest losers in this period. This bearish momentum can be underscored by the RSI, with the same falling below the neutral 50-mark. A potential shift in momentum could occur if buyers push the price above the resistance at $0.00002593. However, a drop below the key support at $0.00002281 might trigger a further correction. Traders should closely monitor volume changes for clearer trend signals.

Polkadot (DOT)

Key points:

  • At press time, DOT was trading at $7.77, down 6.01% in the last 24 hours.

  • DOT’s charts saw strong bearish momentum after falling below key resistance levels.

What you should know:

While the broader crypto market was going through a downturn, Polkadot’s DOT noted some bearish pressure too, trading at $7.77 with a 6.01% decline over the last 24 hours. Although the Chaikin Money Flow (CMF) had a positive reading of 0.05, indicating some underlying strength, the declining volume pointed to a potential correction in the near term. Thus, if DOT manages to break above the resistance level at $8.44, it could see a return to bullish momentum. However, if DOT fails to sustain this level and drops below the support at $7.12, the bearish trend may persist, highlighting the need for cautious observation in the short term.

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