What to watch for in December after an eventful November

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November was an eventful month for crypto, as you know — jumpstarted by Donald Trump’s election win. 

Bitcoin rose 37.3% last month, CoinGlass data shows. That was the asset’s best performance in November (the month with the highest average BTC returns, at 46%) since 2020, when bitcoin gained 43%.

Looking ahead, December is not historically as good a month for BTC (+4.9% returns on average). Bitcoin price did rise by 47% in December 2020 (also after a presidential election); but from 2021 to 2023, the asset’s returns were -18.9%, -3.6% and +12.2%, respectively. 

Bitcoin has been unable to breach the $100,000 level — with some analysts attributing that to investor profit-taking, as well as put option-fueled resistance as traders hedge against possible dips.

BTC was trading around $95,650 at 2 pm ET — down 1.6% from 24 hours prior.

Jeff Embry, managing director of crypto hedge fund Globe 3 Capital, told me he does not necessarily expect specific developments this month to impact crypto markets. Rather, he predicts “an across-the-board continuation” from November of strong crypto demand spurred by the US “taking its boot off the throats of the innovators, risk takers and investors and telling them ‘we support you now.’”

“Before November, the most recent peaks for BTC and ETH were in mid-March,” he explained. “That is an eight-month consolidation period in a bull market, so that market was ready for a catalyst to push to new highs, and the November election provided that catalyst in a gigantic way.”

Globe 3 Capital’s end-of-year BTC price prediction (proclaimed at the start of 2024) was $124,000 — a number Embry said the firm is sticking to. Some others have pointed to $80,000 as a support level in the case of a drawdown. 

“Of course, higher prices depend on higher demand and we are seeing demand across the board from retail, [high-net-worth individuals], institutions, sovereign wealth funds and governments themselves,” Embry added.

We certainly saw plenty of examples in November of companies buying BTC for their treasuries. That appears set to continue. 

From Nov. 25 to Dec. 1, MicroStrategy bought 15,400 bitcoins for roughly $1.5 billion in cash, according to a Monday filing. Bitcoin miner Marathon Digital revealed (also today) it intends to offer $700 million of convertible senior notes — the proceeds of which will primarily go toward buying more BTC. 

MicroStrategy founder Michael Saylor shared a video explaining why Microsoft should hold BTC on its balance sheet. Such a proposal is on the tech giant’s agenda for its Dec. 10 shareholder meeting; though the board recommends a vote against it (noting it already considers this), it’s something to keep an eye on. 

Then there’s the Federal Reserve’s rate decision on Dec. 18. Polymarket odds suggest the market expects a 25-basis point decrease (67% chance). Rate cuts have historically been good for risk assets like bitcoin.  

Finally, the industry continues to await clarity around a possible US strategic bitcoin reserve. To Embry’s point about governments showing interest, US support for this would likely lead to more countries doing the same.

But analysts at Compass Point Research & Trading believe the BITCOIN Act (floated by Sen. Cynthia Lummis) has a less than 10% chance of becoming law.

“We do not expect the Republican-controlled Congress, which will be focused on expiring tax provisions and the federal budget, to allocate funds for this purpose,” Joe Flynn and Ed Groshans wrote. “The primary challenge this action would encounter is the deficit financing of BTC purchases.”

Though Trump could issue an executive order (perhaps creating a subaccount within the Treasury’s general fund), they added, a future administration could undo the action. 

The bottom line? As the weather gets colder for many of us, the crypto narratives are poised to keep heating up.

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