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SEC Meets With Bitcoin ETF Applicants Ahead of January Decision Date, Bitcoin Surpasses $44,000

January 1, 2024

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Stay up to date with our monthly market commentary:

  • The SEC met with BlackRock and other ETF applicants on a weekly basis
  • Bitcoin blesses holders during the festive season with continuation of price rally
  • High on-chain transaction fees drive Bitcoin scaling solutions adoption
  • Bitcoin (BTC) is up 16.8%, while Ether (ETH) is up 19.2% versus last month.*

Market Overview - December

The price of Bitcoin (BTC) increased by 16.8% in December, at one point reaching a new yearly high of $44,100.

Bitcoin continued its impressive 2023 rally, finishing the last month of the year in the green. It continued the trend from November and reached a new yearly high in mid-December before we saw some pullback. Nevertheless, long-term holders of Bitcoin (BTC) were rewarded this year.

Most of that price appreciation can be attributed to the positive news we’ve heard from the SEC and ETF applicant meetings. Both parties met numerous times in December to discuss the final steps leading to the potential ETF approval in January. 

Altcoins also saw upward momentum as standout performers followed Bitcoin’s lead, increasing their user numbers and liquidity. 

The digital asset market sentiment is overall very positive heading into 2024, with investors expecting the approval of spot Bitcoin ETFs in the U.S., new updates to the Bitcoin protocol, and the next Bitcoin halving in April. Historically, Bitcoin halving events have resulted in an uptick in both BTC price and the adoption rate of new investors. 

Undoubtedly, the halving and the potential spot ETF will have the biggest impact in 2024 as key events for investors, financial institutions, and builders in the ecosystem.

Crypto Asset Market Performance Review 

The crypto asset market continued to rally after a successful November, with many assets reaching new highs in December. 

The standout performers were Solana (SOL) and Cardano (ADA), rallying 94% and 75%, respectively.

Bitcoin and Ether both had a month in the green, with price increases of 16.8% and 19.2%*, respectively. 

Ethereum’s strong performance was due to its integration of new layer two solutions into the ecosystem, an inflow of liquidity into the network, and new implementations by staking providers.

Bitcoin’s price increased steadily with the news of all spot Bitcoin ETF applicants meeting with the SEC and updating their applications. This push and the imminent halving indicate a strong buy sentiment by investors and, therefore, a price increase.

Most leading altcoins rallied by around 15%, with some investors suggesting that we may very well witness the next “alt season” (altcoin season) starting at this moment, as Bitcoin has historically pushed up the values of other crypto assets when it rallies. 

For the third month in a row, Solana outperformed Bitcoin, becoming the top-performing crypto asset in December in terms of percentage gains. Several updates to the protocol and new emerging projects continued pushing the price up. The main focus of the ecosystem is to expand and make Solana more interoperable with other blockchains to enable even more smart contact functionalities.

Cardano’s ADA token was the second-best performer, with a 75% price increase. This can be attributed to protocol updates, new staking pools and functionalities, and the finishing touches to the integration that would implement generative AI into the protocol. This performance is even more impressive considering the regulatory pressure Cardano faced in the last couple of months.

Bitcoin Tech Update

December was less eventful for Bitcoin builders and tech enthusiasts than previous months as we entered the holiday season. 

The main focus for most of the Bitcoin community was on building better scaling solutions to combat the current high on-chain fee environment, resulting from increased interest in Bitcoin Ordinals and newly created Bitcoin-native token protocols. These on-chain tokens inevitably increase transaction costs because they bloat the dataset for blocks in the Bitcoin blockchain. 

Such high fees led to greater demand for scaling solutions like the Lightning Network and Liquid. Both networks saw an increase in newly created wallets, indicating a shift of Bitcoin users onto these networks to escape high on-chain fees.

Institutional Interest in Bitcoin

December was an eventful month for institutional investors, with further updates to spot Bitcoin ETF applications. 

BlackRock Meets Extensively With the SEC and Announces Cash Redemptions for Sport Bitcoin ETF

The largest asset manager in the world continued to meet with the SEC every week and updated their application three times last month. 

Most notably, BlackRock announced that it will allow cash redemptions (as opposed to only “physical” bitcoin) for its spot Bitcoin ETF, which resulted from the meetings with the SEC. The regulator urged BlackRock and all other applicants to go with this model, allowing investors to deposit and withdraw cash to track the spot Bitcoin price with their shares. The SEC commented and argued that such a model is the easier route to go down than exposing investors to the dangers of self-custody Bitcoin. 

As December came to a close, BlackRock, VanEck, Fidelity, and six other asset managers submitted new documents that included details of liquid and efficient trading models. Having received the revised applications ahead of the year-end deadline, the SEC’s decision is imminent with the potential approval of the ArkInvest/21Shares joint ETF as early as the first week of January for a January 10th launch.

Bitcoin on Balance Sheets

Michael Saylor, MicroStrategy’s chairman, announced an additional purchase of 14,620 BTC, bringing the Bitcoin on their balance sheet to 189,150 BTC. 

MicroStrategy’s continuous buying of Bitcoin as a treasury asset highlights the digital currency’s use case as a cash reserve alternative for corporate treasuries.

*Closing price data is from December 28, 2023