Crypto Compass by Bitexen Research

From the perspective of financial markets, 2024 stood out as a year when Bitcoin broke records. December, arguably the most impactful month of the year for the cryptocurrency market, concluded with numerous significant developments. The year as a whole witnessed historic moments for cryptocurrencies, culminating in several critical events in its final month.

In December, Bitcoin surged to $108,000, marking an all-time high. One of the primary drivers of this increase was Federal Reserve Chair Jerome Powell, who referred to Bitcoin as the "digital alternative to gold." Powell's statement propelled Bitcoin above the $100,000 threshold, breaking a significant psychological barrier.?

However, the same Powell who fueled this rise also became the cause of $1.3 billion in liquidations and a market-wide decline of up to 30% within the same month. Following the Fed's interest rate cut, Powell responded to a journalist’s question about Bitcoin during a press conference, stating, "We have no plans for Bitcoin. Even if we wanted to, the law does not allow it. Legal changes are required, and we are not pursuing them." This statement triggered sharp market pullbacks, leading to backlash and even harassment directed at the journalist who had posed the question.

Around the same time, Google unveiled its new quantum chip. Capable of solving problems that would take 10 septillion years in just five minutes, this chip caused panic in the cryptocurrency market, as it was perceived as a potential threat to Bitcoin. However, subsequent clarifications stated that the chip did not yet pose a direct threat to Bitcoin.

One of the most notable events of the month was Michael Saylor, founder of MicroStrategy, presenting a Bitcoin-focused proposal to Microsoft. During his presentation, Saylor highlighted Bitcoin's past performance and emphasized the potential gains Microsoft had missed by not investing earlier. He also argued that investing in Bitcoin could give the company a competitive edge and boost profitability. Despite these arguments, Microsoft held a vote after the presentation and decided not to invest in Bitcoin.

Highlights of the Month

- XRP's market capitalization surpassed $150 billion, making it the 3rd largest cryptocurrency.??

- Martial law was declared in South Korea, leading to crashes on the country’s cryptocurrency exchanges.??

- Bitcoin’s price dropped to as low as $62,000 in South Korea.??

- El Salvador, which recognizes Bitcoin as legal tender, announced it would change many of its policies regarding Bitcoin due to a $1.3 billion agreement with the IMF.??

- Russia announced it has started using Bitcoin for foreign trade.??

- Mehmet ?im?ek made a statement on cryptocurrencies: "Crypto is a software, an algorithm. Someone sits down, writes an algorithm, and sells it to you—that’s the summary. At least in the stock market, there is an asset in return, and it’s less risky."??

- Donald Trump commented on Bitcoin surpassing $100,000: “You’re welcome.”??

- The U.S. nonfarm payroll data was released above expectations.??

- Bitcoin reached an all-time high of $108,000.??

- The amount of Bitcoin held in spot ETFs surpassed the amount believed to be in Satoshi Nakamoto’s wallet.??

- South Korea postponed its decision on taxing cryptocurrencies.??

- U.S. inflation data was in line with expectations.??

- The FED lowered interest rates by 25 basis points.

You'd Better Know

Quantum computers stand out as a technological revolution far beyond classical computing. Based on quantum mechanical principles like superposition and entanglement, these devices can test numerous combinations simultaneously, solving complex problems at unprecedented speeds. For instance, Google’s Willow chip has the potential to solve problems in mere minutes that classical computers would take billions of years to tackle. This breakthrough not only sparks excitement in the scientific community but also raises questions about its impact on fields like cryptocurrencies and digital security.

The security of cryptocurrencies relies on robust encryption algorithms, yet the possibility of quantum computers reaching the power to break these systems has raised concerns. While current quantum computers lack this capability, the future may bring scenarios where digital signatures are deciphered, and private keys are compromised. These possibilities, while worrisome, also drive innovation toward quantum-resistant encryption methods. We’ve explored the opportunities and potential risks posed by quantum computers in greater detail in our comprehensive article, which you can read here.

In-Depth Overview

2024 was a year of both transformation and growth for the cryptocurrency markets. Bitcoin reached a historic high of $108,000, fueled by spot ETF approvals, while Ethereum gained attention with its strategic moves to boost institutional adoption and its own ETF approval. In the U.S., critical SEC decisions and regulatory developments in regions like Hong Kong increased global market confidence. In Turkey, the enactment of a new crypto law and potential tax regulations created significant local market activity. Institutional players like BlackRock and Citibank strengthened their presence, attracting more corporate investment to the sector, while Ripple’s new stablecoin projects showcased technological innovation. Steps addressing past issues, such as repayments to Mt.Gox victims, also renewed trust within the sector.

2024 was not just about price movements but also technological and regulatory advancements that shaped the industry. Bitcoin surpassing $100,000 and Ethereum expanding its institutional use cases demonstrated the growing centrality of cryptocurrencies in the financial world. Throughout the year, technological progress, regulatory updates, and new investment opportunities underscored the dynamic nature of the crypto market. You can find a detailed account of the year’s developments in our full article here.