- Bitcoin briefly dipped below $94,000 earlier this week but recovered strongly, stabilizing around the $100,000 mark by Friday.
- Despite these mixed sentiments this week, institutional demand remained strong, adding $1.72 billion until Thursday.
- The COO of Indian crypto exchange Giottustold FXstreet that the financial incentive for investors is to support adding Bitcoin to a company’s balance sheet.
Bitcoin (BTC) reclaimed the $100K level, trading near $100,100 on Friday after a recent decline earlier this week. The recent pullback in BTC was mostly due to high-leverage traders and some holders booking profits. Despite Microsoft’s rejection of adding Bitcoin to the company’s balance sheet, institutional demand remained strong, recording a total inflow of $1.72 billion until Thursday. Giottus COO Arjun Vijay highlighted the growing financial incentive for companies to adopt Bitcoin on their balance sheets.
Bitcoin reaction this week
Bitcoin price started on the back foot this week, declining 3.49% and reaching a low of $94,150 on Monday. The drop triggered a wave of liquidations across the crypto market, resulting in over 562,801 traders being liquidated with over $1.69 billion in total liquidations and more than $180 million specifically in BTC, according to data from CoinGlass.
The recent surge beyond 100K induced traders “to pile into leverage longs, which were quickly punished as price reversed in a liquidation cascade,” says a K33 analyst.
Apart from leverage, Santiment’s Network Realized Profit/Loss (NPL) shows that some holders booked profits on Monday. The NPL metric spiked almost 8 times from 743.2 million to 5.95 billion from Sunday to Monday. This uptick indicates that the holders were, on average, taking profits.
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Bitcoin Network Realized Profit/Loss chart. Source: Santiment
Monday’s Bitcoin liquidation was exacerbated by Tuesday’s announcement that Microsoft’s shareholders had rejected a proposal to add Bitcoin to the company’s balance sheet, further declining Bitcoin’s price.
The proposal suggested BTC could serve as a hedge against inflation. However, Microsoft’s board opposed the idea, citing crypto’s unpredictable price movements and preference for sticking with its existing investment strategies.
In an exclusive interview, Arjun Vijay, Chief Operating Officer and founder at Indian crypto exchange Giottus shared his insights on the matter with FXStreet. Vijay affirms that MicroStrategy has done extremely well with Bitcoin in its balance sheet and other firms like Metaplanet followed suit.
Vijay acknowledges the financial incentive for investors to support the addition of Bitcoin to a company’s balance sheet.“I always think it makes sense to have one or two percentage allocations to crypto. I think the same is applicable for corporations also. Typically you don’t win in the first attempt, so I guess Microsoft will be asked this question six months from now, one year from now, two years from now,” says.
Vijay is confident that at least 10,000 companies listed worldwide would face a similar situation as Microsoft did with its shareholders, being posed the question of why they didn’t invest in Bitcoin when it was at the $100,000 milestone. The executive believes United States (US) politics is critical to these developments.
The adoption of BTC at the corporate level is becoming more mainstream, with companies like Amazon shareholders urging the company to consider investing in Bitcoin as a reserve asset to beat inflation and boost shareholder value, according to a report by the National Center for Public Policy Research (NCPPR). This movement is largely influenced by MicroStrategy’s aggressive BTC accumulation, with 423,650 BTC purchased since 2020.
During the same period, Google’s announcement of its latest quantum chip, ‘Willow,’ sparked concerns about its potential to compromise the integrity of cryptocurrency networks for Bitcoin and crypto encryption.
This event fueled debates over the need for quantum-resistant encryption and underscored the urgency for the crypto community to address vulnerabilities posed by advancing quantum technology.
“Google’s Willow chip, boasting 105 qubits, has showcased unprecedented computational power, solving problems in minutes that would take classical supercomputers billions of years. Despite this breakthrough, experts agree that Willow’s current capabilities pose no immediate threat to Bitcoin’s cryptographic security,” said Ryan Lee, Chief Analyst at Bitget Research, to FXStreet.
On Wednesday, Bitcoin soared past the $100K milestone, closing at $100,444, as the US November Consumer Price Index (CPI) met expectations at 2.7%, fueling investor optimism that the Federal Reserve (Fed) may announce a 25 basis points (bps) rate cut in its upcoming meeting.
“One thing is the US going through a rate cut. Rate cuts are generally pretty good for the risk assets. Trump is coming. Elon Musk is joining Trump in forming the government, so 2025 could be the year of crypto and we are witnessing history”, says Vijay from Giottus.
Despite these mixed sentiments this week, institutional demand remained strong. According to Coinglass, Bitcoin Spot Exchange Traded Funds (ETF) data saw an inflow totaling $1.72 billion until Thursday. If this inflow trend persists or accelerates, it could provide additional momentum to the ongoing Bitcoin price rally.
Total Bitcoin Spot ETF Net Inflow chart. Source: Coinglass
On Friday, Bitcoin held steady around $100,100, while MicroStrategy (MSTR) anticipated potential news of its inclusion in the Nasdaq-100 Index, fueling market interest.
“Inclusion would attract significant capital inflows from index-tracking funds, potentially boosting both MicroStrategy’s stock and BTC’s price, as rising stock price would enable MicroStrategy to continue pursuing its BTC acquisition strategy,” says a K33 analyst.
Bitcoin technical outlook
Bitcoin price faced rejection on the daily resistance level of $101,109 on Thursday and declined 1.11%. At the time of writing on Friday, it recovers slightly, trading at around $100K.
If the $101,109 level continues as resistance, BTC could extend the decline to retest its psychologically important level of $90,000.
The Relative Strength Index (RSI) on the daily chart reads 61, rejecting the overbought level of 70 on Sunday, indicating signs of weakness. Moreover, if the RSI daily closes below the neutral level of 50, it generally indicates bearish momentum is gaining traction, leading to a further decline in Bitcoin’s price.
BTC/USDT daily chart
Conversely, if BTC continues its recovery and closes above $104,088, it could extend the rally toward a new all-time high of $119,510. This level aligns with the 141.4% Fibonacci extension line drawn from the November 4 low of $66,835 to the December 5 all-time high of $104,088.
Bitcoin, altcoins, stablecoins FAQs
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.
Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.
Bitcoin dominance is the ratio of Bitcoin’s market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.
