December 16, 2024
Crypto's Geopolitical Gold Rush Pushes Bitcoin to New All-Time High
Dear Subscriber,
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| By Marija Matic |
Bitcoin (BTC, “A”) has certainly started this week with strength!
After a short pause last week to digest its gains, Bitcoin resumed its upward trajectory to hit a new all-time high above $107,000 today!
This marks another milestone in the No. 1 crypto’s meteoric rise.
This achievement is particularly noteworthy as it has occurred without the usual fanfare and hype that often accompanies major market movements.
But under the hood, a lot is brewing.
As nations recalibrate their financial strategies, the global race for Bitcoin dominance — coupled with growing institutional adoption and DeFi innovation — is driving the market to new heights.
Forbes has characterized this phenomenon as the "Cold War of National Bitcoin Reserves."
The United States currently leads this strategic landscape through aggressive Bitcoin seizures, though other governments want to position themselves better in this new financial frontier.
I wrote more about it last week.
Japan has become the latest player to make a bold move. Lawmakers there have begun to push a proposal for a national Bitcoin reserve. Spearheaded by Satoshi Aoyama, the initiative represents a strategic response to Japan's complex economic challenges. It focuses in particular on Japan’s substantial national debt and vulnerability to traditional currency fluctuations.
This is a sign that Bitcoin is no longer just a speculative asset.
Japan's initiative signals a profound shift in global economic thinking. Nations have increasingly begun to view Bitcoin as a potential safeguard against the inherent volatility of traditional financial systems.
In short, cryptocurrency is emerging as a strategic financial instrument that could provide nations with unprecedented economic flexibility and resilience.
Governments around the world aren’t the only ones shifting their stances on crypto.
The institutional landscape of cryptocurrency is also undergoing a transformative phase.
MicroStrategy (MSTR) has been a pivotal player driving crypto’s mainstream legitimacy. It positioned itself as a crypto powerhouse by loading up on BTC over the past four years.
It now holds an impressive 439,000 BTC, acquired for $27.1 billion at an average price of $61,725 per Bitcoin.
The financial results validate this aggressive strategy. MicroStrategy has achieved remarkable returns, with a Bitcoin yield of 73.49%.
And the Nasdaq's latest decision to include MicroStrategy in the Nasdaq-100 Index represents a watershed moment for cryptocurrency's institutional credibility.
MicroStrategy’s numbers and its Nasdaq inclusion demonstrate the potential of strategic cryptocurrency investment.
But more importantly, they also signal to other institutional investors that Bitcoin is maturing into a legitimate asset class.
Meanwhile, the spot Bitcoin ETFs have seen massive inflows, with $2.17 billion pouring into Bitcoin spot ETFs from Dec. 9 to Dec. 13.
To put it into perspective, Bitcoin ETFs collectively bought 21,300 BTC last week, while only 3,365 new BTC were mined during that time. This could be an early flag to watch for a potential supply shock.
Looking ahead, the volatility surrounding Bitcoin remains a key short-term consideration for traders.
Leveraged long positions could be on the rise again. If Bitcoin’s price drops below $103,000, we could face a potential liquidity grab. . But if Bitcoin manages to hold above this level, $110,000 is the next target.
There’s also the upcoming Federal Open Market Committee meeting later this week to consider. These meetings tend to introduce an additional layer of potential market fluctuation in the near term.
However, Bitcoin's robust performance near its all-time high is notably absent of the typical speculative frenzy. This suggests a more mature and fundamentally supported market evolution.
Overall, Bitcoin’s current all-time high and the quiet influx of institutional and governmental support represent a perfect storm for further price appreciation.
With supply constraints and the rising accumulation of Bitcoin by major players, the stage is set for the next phase of the crypto bull market.
As countries and institutions jockey for position in the "Cold War" over Bitcoin reserves, the outlook for Bitcoin remains overwhelmingly bullish.
But the crypto ecosystem is experiencing more than just a Bitcoin boom. In fact, my eye has been locked on …
DeFi’s Impressive Growth
The decentralized finance (DeFi) sector has begun a remarkable transformation.
Platforms like Aave (AAVE, “C+”) — a DeFi lending platform — are emblematic of this shift, as the Ethereum (ETH, “A-”) network on which it is built has seen a significant surge in lending activity.
Over the past week alone, AAVE has attracted over $500 million in net inflows as investors grow more confident in using DeFi protocols.
Ethereum's liquid restaking platforms have been particularly explosive in 2024, showcasing the sector's innovative potential. The total value locked — often shortened to TVL, a measure of how much liquidity is locked on a platform — in Ethereum liquid restaking has skyrocketed from $284 million in January to an extraordinary $17.26 billion by mid-December.
That’s a staggering 6,000% increase!
This phenomenal growth is driven by liquid restaking tokens, or LRTs. These nifty coins enable users to restake their ETH across multiple protocols, dramatically improving capital efficiency and ecosystem liquidity.
And Ethereum is only the beginning. Solana (SOL, “B”), which has been a darling of this bull cycle and its coin a top-performer, is approaching its 2021 peak TVL.
Meanwhile, emerging networks like Sui (SUI, Not Yet Rated), Base and Arbitrum (ARB, “B”) are breaking their own historical records.
Even Bitcoin’s DeFi ecosystem is expanding, with its TVL now reaching $7.13 billion, underscoring the growing integration of Bitcoin into the broader decentralized finance space.
Related story: Make Bitcoin Fun Again with Merlin Chain
This collective surge across multiple chains represents more than just price appreciation. It points to the diversification and maturation of the DeFi sector.
And that growth will draw in more capital and attention.
These impressive trends — the international crypto “Cold War”, the growing institutional interest in Bitcoin ETFs and the growth of the DeFi sector — point to a future where crypto plays an increasing integral role in the international monetary landscape.
With the opportunities you could find along the way, that’s a future any savvy investor should want to be a part of.
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Best,
Marija MatiΔ
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