Sudden price drop brings calm to bitcoin market?

In the first week of December, the bitcoin price made a giant leap upwards. Some of those price gains were suddenly surrendered during the night from Sunday to Monday. What's going on? You can read that, and more, in this Weekly!

This Weekly in brief:

• Market: This week, the crypto market experienced and brief but fierce correction. The optimism in the market has not disappeared yet. Is this the beginning of a longer correction, or will we soon resume the rise?
• News: One of the current stories around crypto asset commissioning concerns the large wealth transfer between old and young generations. Galaxy estimates that this will create a daily demand increase worth $20 million to $28 million over the next 20 years. 
• Behind the scenes: The crypto fund Bull Run V recently started using Amdax's professional infrastructure. Want to know more? Read more about our institutional solutions for the crypto market here.

Cryptomarket

On the night from Sunday to Monday, the calm was rudely disrupted by a sudden price drop. In ten minutes, the price fell by more than $2000 and briefly tapped the $40,000 mark. A good 10% lower than this year's high at $45,000.

The ferocity of this price movement was caused by an abundance of leveraged traders who were forced to close their positions. It puts the market at a crossroads. Is this the beginning of a longer and deeper correction? Or was this all, and will we soon continue the upward trend?

There is something to be said for both. The mood has been quite optimistic in recent months. In two months, bitcoin's price rose from $26,000 to $45,000, up 70%. Especially the last stretch was fast. The price had soared well above its 200-day average. Bitcoin felt somewhat expensive.

The market expects the SEC to approve bitcoin ETFs from the likes of BlackRock and Fidelity in early January. That prospect could provide a quick recovery in the coming days. But even a bubbling bull run does not go up in one straight line.

In a bullish trend, investors get the idea that it is not smart to sell your investment (right now). After all, tomorrow the price could be even higher than today. A reservoir of unrealised gains builds up. Until the point when the tide turns, and as yet some of those profits are taken.

Such a correction, because that is what we are talking about, can happen in two ways. The best known is that the price falls sharply over a short period of time, back towards the average. Alternatively, the price stays about the same for a longer period of time, moving towards the average.

We have seen both types in previous bull markets. Fierce corrections where the price fell 30%, but also recovered quickly. And smaller corrections of around 10% after which the price continued to move sideways for a while.

What is striking about the rise over the past two months is that it was not just bitcoin that did well. Bitcoin did take the lead, jumping up first each time, but the rest of the market then followed a few days later.

However, price gains for altcoins were not evenly distributed. Some alts did great, while others barely got out of place. Over the past two months, solana and avalanche, for instance, have significantly outperformed bitcoin, while binance coin, tron and ripple had to give up significantly.

We are heading towards the end of the year again. Traditionally, that is a time for looking back and looking forward. For a moment, attention turns to what lies behind us, but also to the trends thought to have an impact on the crypto year ahead. One such trend is the transfer of wealth from old generations to new ones, the Great Wealth Transfer. In the United States, baby boomers and older generations cover one-third of the population but account for two-thirds of household wealth ($96 trillion).

Research firm Cerulli Associates estimates that $84.4 trillion will soon flow to younger generations, with millennials as the main group. Coldwell Banker estimates that in six years, millennials will have five times more assets than they do today. This is good news for crypto companies, as younger generations are known to be more receptive to investing in bitcoin and other crypto assets. They grew up as digital natives and are used to having digital assets.

Researchers from the company Galaxy estimate that this asset transition will create a daily demand increase worth $20 million to $28 million over the next 20 years. "Several studies show that crypto acceptance among younger generations is at least 3 times higher compared to baby boomers." For the Netherlands and Europe, weaker estimates of the 'Great Wealth Transfer

Other news:
- LINE NEXT raises $140 million for investment in the Web3 ecosystem. The Web3 branch of the Japanese social media giant plans to put the money raised into the expansion of its own NFT platform, among other things. Its first version should launch as early as the beginning of January. Every month, some 180 million users send messages via LINE's WhatsApp-like app. The Web3 applications being developed should be usable through this app.
- Saudi Aramco and SBI want to invest in digital assets together. The Japanese investment bank announced the plans last week. Earlier, SBI unveiled a $100 million fund it set up with Standard Chartered in Dubai. The partnership with Aramco is aimed at co-investing in digital assets. It remains to be seen whether that includes crypto assets, or whether the focus is on digitising existing financial products. So far, the Saudi regime is not known as crypto-friendly.
- According to VanEck, the bitcoin price will reach a new high in 2024. With 15 predictions, the asset manager looks at the new crypto year. About the price of bitcoin, VanEck is remarkably precise: on 9 November, it breaks the previous record. VanEck puts the bitcoin price rise in the context of a political turn to the right. "Donald Trump's win creates optimism about dismantling the [regulator's] SEC's hostile approach."