Bitcoin’s (BTC) price is back in the six-digit territory as the largest cryptocurrency extended its early 2025 bounce on Monday.
BTC advanced towards $100,000 earlier during the trading session, then broke sharply above the threshold, rising 2.5% in an hour as traditional U.S. markets opened. It was changing hands at around $102,000 recently, its strongest level since December 19 and up 4.3% over the past 24 hours.
The broad-market benchmark CoinDesk 20 was up 3.5% during the same period, with all the twenty crypto majors posting positive returns. Ethereum’s ether (ETH) climbed 2.8% to $3,700, while Solana’s SOL advanced 4.5% to above $220.
Bitcoin and the broader crypto market ended 2024 with a correction, paring some of the gains of the massive rally since Donald Trump’s election victory as investors took profits. Prices and trading volumes declined during the holiday lull, coupled with outflows from spot BTC and ETH exchange-traded funds. BTC reached a local bottom near $91,000 on December 30, a nearly 15% retreat from its record highs.
Demand returns as leverage remains muted
With the start of the first full business week of the year and traders returning to their desks after the holiday season, headlines of corporate BTC purchases continued. MicroStrategy announced on Monday purchase of another 1,020 BTC, while Texas-based energy management firm KULR Technology Group added $21 million worth of BTC to its treasury, doubling its holdings.
Spot BTC ETFs saw $908 million in inflows on Friday as a sign of demand returning. Meanwhile, open interest on BTC futures is significantly lower than in mid-December on the institutional-focused marketplace CME and on an aggregate basis, indicating that the recent bounce in prices was primarily driven by spot buying rather than leverage, noted James Van Straten, senior analyst at CoinDesk. Funding rates were also at neutral levels across the board, CoinGlass data shows, indicating a lack of froth during the rally.
Open interest for BTC futures across exchanges (CoinGlass)
Fed risk
“Just as we saw institutions window dressing with their balance sheets mindful of risk assets for year-end and de-risking ahead of holidays, it’s expected we see price action and demand recouping especially as we head into what we expect will be a positive year for the asset class and upcoming U.S. administration,” Paul Howard, senior director of crypto trading firm Wincent, told CoinDesk in a Telegram message.
“My personal view is not to read too much into these levels [BTC over $100,000] as we can expect volatility to increase in the coming fortnight,” Howard added.
Crypto analytics firm 10x Research also forecasted a rebound in crypto prices in early January heading into President-elect Trump’s inauguration in a Monday report, but warned of a month-end sell-off ahead of the Federal Reserve’s January meeting.
Hawkish comments from Fed Chair Jerome Powell at the December meeting marked the start of a pullback for risk assets, and 10x Research noted it would take time for the Fed to reverse its stance even if inflation cools further in the coming months.
“The primary risk remains the Federal Reserve’s communication, especially if renewed concerns about inflation emerge,” Markus Thielen, founder of 10x Research said. “We anticipate lower inflation this year, though it may take some time for the Federal Reserve to recognize and respond to this shift formally.”
“While some enthusiasm is expected at the start of the new year, this is not the time for the same level of bullishness we experienced from late January to March 2024 or late September to mid-December,” he added.
