The largest token changed hands at US$96,445 as of 6:33 a.m. Friday in New York, partly paring a retreat of almost three per cent from a day earlier. Smaller rivals including Ether and Dogecoin, a favorite of the meme crowd, oscillated in tight ranges.
As we enter the final days of a record-breaking year for Bitcoin, investors are assessing the remaining impetus from U.S. President-elect Donald Trump’s embrace of the cryptocurrency sector.
Trump’s Crypto-Friendly Environment
Trump is pushing ahead with a promise to create a crypto-friendly environment in the U.S. and has backed the idea of establishing a national Bitcoin reserve. Traders are banking some of the profits sparked by the Republican’s crypto cheerleading and are waiting to see if the mooted reserve is feasible.
The market is also braced for the expiry of a substantial quantity of Bitcoin and Ether options contracts on Friday — one of the biggest such events in the history of digital assets, according to prime broker FalconX. The notional value of the Bitcoin contracts on the Deribit exchange — one of the largest for digital-asset derivatives — exceeds US$14 billion, while the equivalent figure for Ether is about US$3.8 billion.
Options Expiry: A Potential Market Mover
Sean McNulty, director of trading at liquidity provider Arbelos Markets, flagged the risk of a ‘choppy market’ amid the expiry of the derivatives positions. This could lead to increased volatility in the market, making it challenging for investors to predict price movements.
MicroStrategy’s Bitcoin Accumulation Plan
Despite the wavering market, MicroStrategy Inc. has signaled the possibility of expanding its program of purchases of the token. The company has transformed itself from a software maker into a Bitcoin accumulator and now owns more than US$40 billion of the digital asset.
This move by MicroStrategy is seen as a significant vote of confidence in the cryptocurrency sector, but it remains to be seen whether this will have a lasting impact on the market.
Investors Withdraw From Bitcoin ETFs
The original cryptocurrency is flirting with a drop for December, which would be its first monthly decline in four, according to data compiled by Bloomberg. Bitcoin reached a record high of US$108,316 on Dec. 17 before pulling back.
Investors withdrew a net US$1.5 billion from a group of one dozen U.S. spot-Bitcoin exchange-traded funds in the four trading days through Dec. 24, the heaviest such outflow since Trump’s victory in the U.S. election on Nov. 5. However, the trend reversed on Thursday, with investors pouring US$475 million into the group, ending the four-day streak.
Conclusion
As we approach the end of a record-breaking year for Bitcoin, investors are assessing the remaining impetus from Trump’s crypto-friendly environment. The market is bracing itself for the expiry of options contracts and wavering in the face of decreased investment. However, with MicroStrategy signaling its intent to expand its Bitcoin accumulation program, there is still hope that this will have a lasting impact on the market.
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