This week, the crypto market made headlines as Bitcoin rallied to a fresh all-time high, pushing the total market cap of cryptocurrencies above $3 trillion for the first time. Buoyed by mixed inflation data and expectations for further rate cuts by the Fed, Bitcoin surged past $93,000, while broader macro sentiment showed growing acceptance of digital assets as a treasury asset and risk-on sentiment continued to build.
Macroeconomic Overview
The week began with headline and core inflation numbers matching expectations at 2.6% and 3.3%, respectively, giving markets confidence in the Fed’s dovish stance. The probability of a 25 bps rate cut at the December FOMC meeting increased to 82.5%. These developments spurred a rally in both the crypto and traditional equity markets, as investors continued to price in an easing monetary policy environment. The U.S. dollar surged, and Treasury yields rose following the U.S. election, as markets anticipated a Trump administration’s more expansionary fiscal policies.
Bitcoin continued its rally and reached an all-time high of $93,480 in the New York session. Institutional appetite was highlighted by ETF inflows surpassing $2.28 billion, setting new records for demand. This move has been supported by Trump’s return to the presidency and plans to create a strategic BTC reserve, promoting Bitcoin as a primary store of value, similar to gold. Despite Bitcoin’s all-time high, implied volatility remained relatively low, indicating that many large players were well-positioned for the move, selling calls into the rally and buying puts to hedge against downside risk.
In contrast, traditional safe havens like gold saw a significant decline, dropping 5% since the election, signaling a shift in preference towards Bitcoin as the emerging “digital gold.” Analysts have been keen to point out that the move represents a structural shift in market preference, with capital reallocating from traditional safe havens to Bitcoin, as evidenced by BTC’s market cap surpassing silver. A further move into Bitcoin from gold, even a marginal one, could push BTC above $97,000, highlighting the potential upside.
Crypto Market Dynamics
Bitcoin’s impressive rally since the election has brought the $100,000 to $120,000 price range into view, and there is growing optimism that a move to these levels may not be far off. The rally was primarily driven by strong ETF inflows and a favorable macro backdrop, with expectations of a friendlier crypto regulatory environment under the new Trump administration.
However, while the rally in BTC was clearly the focus, the broader market also experienced significant activity. Memecoin activity spiked, with Dogecoin rallying 20% following the announcement of the Department of Government Efficiency (DOGE) led by Elon Musk and Vivek Ramaswamy. Dogecoin has surged 153% since the election, outperforming Bitcoin’s 30% gain and overtaking XRP to become the sixth largest cryptocurrency by market cap. The move signals the growing intersection between the political landscape and crypto assets, with DOGE becoming the most talked about memecoin in the past week.On the options front, there was heavy call activity across the board, especially in far-dated strikes. Key trades included active buying in Dec-27 100k and 105k strikes, and longer-dated June 2025 call spreads at the 150k/160k levels. Despite Bitcoin’s rally, implied volatility trended lower as many market participants had positioned themselves well ahead of time, using the rally to take profits and hedge downside risk.
Flows and Market Activity
Flows this week highlighted significant demand for upside exposure. Notable trades included a 540-lot 95k/105k call spread in December 2024 and active buying in 100k and 105k strikes. Further out, there was a 300-lot Jun-25 150k/160k call spread, reflecting bullish positioning for potential further gains. Additionally, the term structure remained inverted, with Nov-22 implied volatility surging by 4 vol points since Friday, reflecting heightened near-term activity ahead of the low-liquidity Thanksgiving period, with U.S. equity markets closed on Thursday and an early close on Friday.
BTC rallied to $90,500, and ETH reached $3,150, with strong flows into iBit’s options trading, expected to launch tomorrow, and Goldman Sachs’ discussions to create a digital assets platform further signaling growing adoption. MicroStrategy also acquired 41,780 Bitcoin between Nov 11 and Nov 17, announcing a $1.75 billion convertible senior notes offering.
Front-end implied volatility increased, with BTC Nov 22 vol climbing, while ETH remained stable around 61v. Flows leaned bullish, with heavy buying in calls across different tenors, particularly in far-dated expiries like Mar-25 and Dec-24.
Outlook
Looking ahead, the market remains cautiously optimistic as we move toward the end of the year. Implied volatility for Bitcoin remains subdued even as prices reach new highs, suggesting that large market participants are well-prepared for the current price action. However, with market leverage at elevated levels, especially in altcoins, the risk of deleveraging remains significant if there is a sudden price correction. Perpetual funding rates have also risen, and any spike in market volatility could trigger a pullback.
The broader macro backdrop remains supportive for now, with the next key events being the upcoming Core PCE and non-farm payroll data releases, which could provide further insights into the Fed’s rate path. Market participants will also be closely watching developments in the U.S. as Trump’s proposed policies, such as increased tariffs on China, could weigh on broader market sentiment.
Despite these risks, the sustained inflows into Bitcoin ETFs and a continued rotation from gold to BTC provide a solid backdrop for a potential move higher, with $100,000 now firmly in sight. For the rest of the crypto market, particularly altcoins, the focus remains on whether they can catch up to Bitcoin’s dominance or if BTC will continue to be the preferred asset for institutional investors.
In summary, the week saw Bitcoin reach new all-time highs, propelled by ETF inflows, dovish Fed expectations, and a supportive macro environment. Market participants are preparing for a potential breakout above $100,000, while also hedging against downside risks amid elevated leverage levels. The next major catalysts will be upcoming macroeconomic data releases and any shifts in policy direction under the new administration, both of which could shape the near-term trajectory for Bitcoin and the broader crypto market.
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