The total cryptocurrency market capitalization has experienced a significant surge, increasing by 3.2% over the last 24 hours to reach $3.71 trillion on December 16. This rise in market value is accompanied by a substantial increase in trading volume, which has jumped by 27% to $162 billion. These developments indicate intense demand-side pressure driving the crypto market upward.
Bitcoin and Ethereum Prices Increase
The largest cryptocurrency by market capitalization, Bitcoin (BTC), has seen its price rise by 3.5% over the last 24 hours, trading at around $81,587 as of this publication. This is just below the all-time high of $106,488 set during early Asian trading hours on December 16.
Ethereum (ETH), the second-largest cryptocurrency, has also experienced a significant increase in price, climbing by 3.25% to trade around $3,976 at the time of writing.
Factors Contributing to the Bullish Crypto Market
There are several factors driving the crypto market’s upward momentum today. One key factor is US President-elect Donald Trump’s recent comment on his intentions to build a strategic Bitcoin reserve and do ‘something great’ with crypto. This statement has sparked speculation about the potential for Bitcoin to become a US reserve asset.
According to Jack Mallers, founder and CEO of Strike, Trump could issue an executive order on ‘day one’ of his second term to designate Bitcoin a reserve asset status. Mallers estimates that this would not be a large-scale move but rather a significant position.
Additionally, there are possibilities of a third Bitcoin reserve bill at the state level, which would follow Texas and Pennsylvania’s lead. Satoshi Action Fund CEO Dennis Porter expects at least 10 states to introduce a Bitcoin reserve bill in total.
US Federal Reserve Interest Rate Reduction
The US Federal Reserve is expected to reduce the benchmark borrowing cost by 25 basis points to the 4.25% to 4.5% range, marking a total of 1% interest rate reduction since September 18. Market participants are expecting the latest core Personal Consumption Expenditures (PCE) price index reading this week, which is the Fed’s preferred measure of inflation.
This reading will reveal whether the recent upticks in consumer price inflation are coincidences or signs of a genuine inflation rebound. Despite these factors, the season remains bullish for cryptocurrencies, and with President-elect Trump expected to foster a crypto-friendly environment, prices are expected to move even higher toward the end of the year.
Institutional Demand for Spot ETFs Remains High
The crypto market’s ongoing gains align with the huge capital flows into spot exchange-traded (ETF) funds. Farside Investors reported that approximately $2.16 billion flowed into US-based spot Bitcoin ETFs over the December 9 to December 13 week. Approximately $0.6 billion entered these investment products on November 12 alone.
Similarly, spot Ethereum ETFs have experienced two weeks of continuous inflows and have not witnessed a single day of net outflow since November 21. They have now attracted $1.4 worth of capital over the last 14 days, taking the combined assets under management to a record high of $1.98 billion on December 13.
Crypto Market Cap Nears $4 Trillion
Data from Cointelegraph Markets Pro and TradingView show that TOTAL—the total market capitalization of all cryptocurrencies—has rallied more than 34% since November 11. This price action has recorded a series of higher highs and higher lows, leading to the appearance of an ascending parallel channel on the daily chart as shown below.
An ascending parallel channel pattern is a bullish trend characterized by two upward-sloping parallel lines. A breakout above the channel can signal a continuation of the move higher, while a breakdown below can indicate a possible trend change.
The price must hold above the immediate support provided by the lower boundary of the channel at $3.57 trillion to sustain the uptrend. If this happens, TOTAL may move toward the middle boundary of the channel at $3.73 trillion and later to the upper boundary at $3.9. A breakout above the upper boundary would signal a bullish breakout from the chart pattern, with the next logical move being toward the $4.0 trillion mark. This would represent a 10.8% uptick from the current price.
Investor Warning
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
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