Bitcoin’s recent rally last week wasn’t without its ups and downs, as investors flocked to Ethereum ETFs, and more.
Bitcoin, Ethereum, and the Return of Trading
Bitcoin is set to hit $100,000 before the New Year. 100K is a huge psychological milestone, and the crypto community is celebrating the milestone. It’s a big thank you, a big, “I told you so.” Some are scared, but many are pointing to a Darth Maul-like 2017 when Bitcoin first hit $10,000. To explain the speed of $100,000, we can point to several triggers. The most obvious is the Trump administration’s support for cryptocurrency candidates. A few weeks ago, Trump appointed Scott Bessent, a hedge fund manager who supports the creation of a strategic national cryptocurrency reserve, as Secretary of the Treasury. Howard Lutnick, CEO of Cantor Fitzgerald, which owns most of the US Treasury’s Tether bonds, was nominated as Commerce Secretary. This week, he appointed crypto advocate Paul Atkins as SEC chairman. Since 2017, Atkins has served as co-chair of the Chamber of Digital Commerce’s Token Alliance, which focuses on policy issues related to the digital asset space. The day after the election was announced, Bitcoin hit $100,000.
My favorite quote about the Trump administration’s choices came from Noelle Acheson on the excellent Bits + Bips podcast this week. Speaking about the choices the Trump administration made over the previous administration, Acheson said, “It’s like a tough choice.”
Another driver for Bitcoin is the return of the retail industry to cryptocurrency. In recent weeks, the value of many of the so-called “dinosaur coins” has increased by hundreds of percent. Dinocoin was a popular coin in the last cycle but has since fallen out of favor, much like XRP. XRP’s market cap surpassed Solana to rise to fourth place, and briefly moved up to third place from Tether as an example of the rise of dinosaurs.
I think there will be two types of traders entering the market in this cycle, and one of them will be buying Bitcoin. You invest in altcoins like a regular trader because “it’s too late to make money from Bitcoin now.” But unlike previous cycles, I think now that Bitcoin has been institutionalized by companies like BlackRock, large assets and older traders (e.g., the baby boomers of millennials) will enter the market. They have money, but they won’t be getting into Bitcoin, or even Ethereum on the risk curve.
Speaking of Ethereum, it’s been a pretty good week for the high-flying alt-cryptocurrency Bitcoin. This week, Ethereum ETF flows have been higher than BTC ETF flows for a few days in a row. It seems like the funds are on the rise. Another good sign is Ethereum’s performance during Bitcoin’s rally. So far, ETH has outperformed BTC and SOL.
With ETH showing signs of strength, you can see that ETH-based blue chip NFTs are doing well. Who are you? All of the above NFT collections have seen their prices increase in the past 7 days. You can also expect Ethereum L2 to do well, and it did. I think Base is the best Ethereum L2 at the moment. They have proven to the market that tokenization is not coming, Ethereum L1 is a popular strategy. The artificial intelligence proxy in Base via Virtual is the strongest of all chains. Finally, Coinbase has not yet started attracting customers to Base.
Finally, I will leave you with a question that we are considering this week in Token Narratives. Where are we in the market cycle? This is a good thing to remember when things get hot.
