Bitcoin made history this week, crossing the psychologically significant $100,000 threshold and rallying to an all-time high of $103,620 on December 5. This breakout marked a major milestone in the crypto market, supported by strong institutional demand and favorable macroeconomic conditions. Ethereum also saw robust performance, maintaining its upward momentum as capital rotated out of Bitcoin dominance into altcoins.
Macroeconomic Overview
The broader macro backdrop remained supportive for digital assets this week. Fed Funds Futures now imply a 70% probability of a 25 bps rate cut at the December FOMC meeting. While inflation concerns have been tempered, data on November payrolls, expected to be released shortly, may provide further insights into the Fed’s next steps.
Markets continue to price in three additional cuts in 2025 despite persistent geopolitical risks. Spot ETFs recorded significant inflows, with Bitcoin products seeing over $1 billion in net flows this week alone. Ethereum ETFs also attracted attention, recording $300 million in inflows, underscoring growing institutional confidence in digital assets as part of diversified portfolios.
Crypto Market Dynamics
The breakout above $100,000 was driven by a combination of factors:
● Short Squeeze: Over $90 million worth of Bitcoin shorts were liquidated within two hours as prices surged above six figures. Aggressive topside buying and delta hedging by market makers amplified the move.
● Volatility Spike: BTC implied volatility jumped 10 points in the front end and 5 points in the back end during the rally. While vols eased later in the week, they remain elevated compared to historical levels.
● Institutional Activity: Corporate treasuries and funds continued to add Bitcoin, with MicroStrategy completing a $5.4 billion BTC purchase—its largest ever. Microsoft’s upcoming shareholder vote on adding Bitcoin to its balance sheet, scheduled for December 10, remains a closely watched event.
Ethereum saw its share of the spotlight as capital rotated out of Bitcoin dominance. ETH gained 11.65% during the week, with the ETH/BTC pair rising to 0.0376, up nearly 18% from last week.
Altcoins such as XRP , ADA, and XLM also rallied, buoyed by expectations of crypto-friendly policies under the incoming U.S. administration.
Flows and Market Activity
Paradigm flows this week highlighted strong demand for upside exposure across the board:
● Bitcoin: The most notable activity included call buying at the $110,000 and $120,000 strikes for December 2024 expiries. The term structure flipped to backwardation as front-end volatility spiked following the rally.
● Ethereum: ETH flows saw bullish activity, including a notable lift of the 28 March 2025 $200,000 call at 73v. The ETH Dec 27 $3,800/$4,400 call spread was also actively traded as traders positioned for further upside.
Despite BTC’s dominance slipping from 62% to 59%, the overall market remained bullish as altcoins gained traction. Spot ETFs for ETH continued their winning streak, with net inflows totaling over $300 million in just two days, reflecting growing optimism.
Outlook
With Bitcoin now firmly in a new price discovery phase above $100,000, the market’s trajectory hinges on several factors:
1. Microsoft’s BTC Proposal: A vote scheduled for December 10 on adding Bitcoin to Microsoft’s balance sheet could act as a catalyst for further institutional adoption.
2. Rate Cuts and Economic Data: November payroll data and December’s FOMC meeting outcomes will influence market sentiment heading into year-end.
3. Altcoin Season: As Bitcoin consolidates above six figures, capital rotation into Ethereum and other altcoins could gain momentum. ETH’s next resistance level remains its all-time high of $4,868, a 35% move from current levels.
In summary, this week marked a historic moment for Bitcoin and the broader crypto market. With the six-figure milestone achieved and institutional demand at an all-time high, the stage is set for continued growth as the year closes out.
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