As 2024 draws to a close, Bitcoin is trading in a critical price range, with monthly support levels under pressure and signs of short-term volatility emerging.

Analysts predict a potential pullback to $90,000, with a deeper correction possible in 2025. The transformation of old support levels into new resistance reinforces the confirmation of a technical downturn.

BTC/USD Daily Chart

On the macroeconomic front, while U.S. unemployment data takes center stage, stagflation concerns are threatening risk assets.

Rising inflation and increasing unemployment risks are causing investors to worry about a scenario similar to the 1970s. The Federal Reserve’s uncertain stance on interest rates further reinforces this outlook.

Bitcoin Bull Market Correction Drawdowns

Despite low market volume, active whale purchases are fueling optimism for positive price movement. Binance’s stablecoin reserves stand at $29.7 billion, maintaining market confidence. However, stablecoins alone are not expected to drive price increases.

In November, CryptoQuant CEO Ki Young Ju stated that high reserves alone wouldn’t cause a BTC price surge. Referring to the BTC-stablecoin reserve ratio metric, he told his X followers, “Stablecoins alone cannot provide enough buy-side liquidity for Bitcoin.”

Binance ERC-20 Stablecoin Reserves

Short-term investor profitability is at a critical turning point, with signs of seller exhaustion. Despite declining retail interest towards the end of the year, whales’ accumulation trend increases the likelihood of an unexpected price surge.

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Record Demand for Bitcoin ETFs

Spot Bitcoin ETFs accounted for $35.66 billion of the total inflows in 2024, significantly outperforming initial projections by industry analysts. Leading the pack was BlackRock’s iShares Bitcoin Trust ETF with $37.31 billion in net inflows. Fidelity Wise Origin Bitcoin Fund (FBTC) followed with $11.84 billion, while ARK 21Shares Bitcoin ETF (ARKB) secured the third position with $2.49 billion.

Galaxy Digital’s research director, Alex Thorn, had earlier estimated $14 billion in inflows, a prediction that the market tripled, underscoring the unexpected demand. However, the year closed with $1.33 billion in outflows from Bitcoin ETFs. Notably, IBIT experienced its largest single-day outflow of $188.7 million on December 24.

Ethereum ETFs’ Performance

Spot Ethereum ETFs concluded 2024 with $2.68 billion in net inflows. BlackRock’s iShares Ethereum Trust ETF (ETHA) led the category, recording $3.52 billion in inflows. Fidelity Ethereum Fund (FETH) followed with $1.56 billion, while the low-cost Grayscale Ethereum Mini Trust ETF (ETH) attracted $608.1 million. Bitwise Ethereum ETF (ETHW) also surpassed the $400 million mark.

2025 Outlook

Although Ethereum underperformed Bitcoin and Solana in 2024, analysts predict a strong recovery in 2025. Bitwise forecasts Ethereum prices to reach $7,000, driven by increased activity on Ethereum layer 2 solutions and higher inflows into spot Ethereum ETFs. This anticipated growth positions Ethereum to play a more significant role in the evolving crypto ETF landscape.

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From 500K to 7.5M Transactions in Nine Months

Starting with a modest 500,000 daily transactions in March, Base exceeded 7.5 million daily transactions by December. This remarkable 15x growth was fueled by innovative protocols and ecosystem investments.

One standout contributor is Virtuals, an AI-powered platform, which boosted its associated tokens’ total market capitalization to $3 billion, significantly driving ecosystem development. Additionally, MegaETH, launched on the Echo platform, garnered $10 million in investment within three minutes, setting a new record for rapid funding.

Scaling Challenges Amid Rapid Expansion

The explosive growth of Base has not come without challenges, particularly in infrastructure. Increased storage demand has posed significant hurdles:

• Archive nodes now require 500 GB of storage weekly.
• New node setup times have exceeded 15 hours.

To address these issues, Base’s development team announced the integration of Reth, a solution designed to improve network efficiency, ensure operational transparency, and enhance community participation.

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Bitcoin price surpassed $85,000 on November 11, reaching $86,788, and the Crypto Fear & Greed Index showed investor sentiment at 80, or “extreme greed,” on November 12. This marked one of the highest values recorded by the index.

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The last time the index hit 80 was on April 9, just before Bitcoin experienced an 18% correction, with the price dropping from $69,135 to $56,500 by May 1. This data suggests that while investors are in a state of extreme greed, caution is necessary as a correction could follow.

After Bitcoin reached a high of nearly $90,000 on November 12, it continued its best weekly performance since the 2023 banking crisis. Over the past seven days, Bitcoin added $413 billion to its market capitalization.

Leverage Cleanup Needed Before Bitcoin Hits $100,000

Current leverage ratios, or the amount of borrowed funds used for trading positions, are reaching unsustainable levels. Kris Marszalek, co-founder and CEO of Crypto.com, warned on November 12:

“Leverage needs to be cleaned up before the attack on $100K. Please manage your risk carefully.”

According to CryptoQuant data, Bitcoin’s estimated leverage ratio across all cryptocurrency exchanges stands at 0.217, which is the highest level seen since October 2023.

Investors Should Prepare for Volatility Ahead of More Bitcoin Gains

While investors are advised to be cautious, Donald Trump’s presidential victory is expected to contribute to Bitcoin‘s continued price appreciation. Shunyet Jan, head of derivatives at Bybit, told Cointelegraph:

“Elevated funding rates and a bullish options skew suggest that both retail and institutional investors are eagerly positioning to capture further upside, with many leveraging their positions. The high funding rates, in particular, underscore the level of leveraged bets, reflecting strong demand for long exposure as confidence continues to build.”

Some analysts expect Bitcoin to surpass the $100,000 mark before the end of the year, driven by anticipated improvements in macroeconomic conditions due to Trump’s presidential victory.

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According to Matrixport’s latest report, the fourth quarter of 2024 holds a positive outlook for Bitcoin. Despite the challenges faced in the third quarter, Bitcoin’s trading range has narrowed, setting the stage for a potential breakout. This optimism is attributed to anticipated Federal Reserve interest rate cuts, favorable seasonal factors, and the upcoming US presidential elections.

The report notes that while the Federal Reserve (FED) has not changed interest rates, FED Chairman Jerome Powell mentioned that a rate cut might be possible in the September meeting if inflation follows the predicted path. Matrixport’s inflation model forecasts a gradual decline in the Consumer Price Index (CPI) over the next year. The possibility of several quarter-point rate cuts in the coming quarters could provide liquidity and incentives for risky assets like Bitcoin.

With current interest rates at 5.25% and the inflation rate at 3%, the gap reflects the FED’s restrictive policy. According to the report, this indicates that the FED might significantly reduce interest rates over the next twelve months, which could benefit Bitcoin.

Matrixport’s report also highlights the seasonal challenges Bitcoin typically faces in August and September. Historically, these months see low trading volumes due to the summer holiday period and traders awaiting economic indicators and central bank policy decisions in the fall, leading to steady returns and weak performance.

The report suggests that the US presidential elections could bring positive news for Bitcoin. If former President Donald Trump is re-elected, his administration might adopt a more favorable regulatory stance towards cryptocurrencies, reducing regulatory uncertainties and promoting innovation. Trump’s recent attendance at the Nashville Bitcoin conference was well-received, although he did not outline specific plans for a Bitcoin reserve.

By focusing on these key factors, Matrixport’s analysis provides a comprehensive outlook on Bitcoin’s potential recovery and the broader market dynamics influencing it.

The post Matrixport Predicts Bitcoin’s Recovery in Q4 2024 appeared first on Coin Engineer.

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