The price of Bitcoin (BTC) has returned to six-digit territory as the largest cryptocurrency extended its early 2025 bounce on Monday.
BTC advanced towards $100,000 early in the trading session, then sharply surpassed the threshold, rising 2.5% in an hour when traditional US markets opened. It was recently changing hands at around $102,000 , its highest level since December 19 and an increase of 4.3% in the last 24 hours.
The broad market benchmark CoinDesk 20 index rose 3.5% over the same period, with the top twenty cryptocurrencies posting positive returns. Ethereum ether (ETH) rose 2.8% to $3,700, while Solana SOL advanced 4.5% to surpass $220.
Bitcoin and the broader crypto market ended 2024 with a correction, paring some of the gains from the massive rally since Donald Trump’s election victory as investors took profits. Prices and trading volumes declined during the holiday break, along with outflows from BTC and ETH spot exchange-traded funds. BTC hit a local low near $91,000 on December 30, a nearly 15% pullback from its all-time highs.
Demand returns as leverage remains low
With the start of the first full trading week of the year and traders returning to their desks after the holiday season, headlines about corporate BTC purchases continued. MicroStrategy announced on Monday the purchase of another 1,020 BTC, while Texas-based energy management company KULR Technology Group added $21 million in BTC to its treasury, doubling its holdings.
BTC spot ETFs saw inflows of $908 million on Friday in a sign of returning demand. Meanwhile, open interest in BTC futures is significantly lower than in mid-December on the CME institutional market and in aggregate terms, indicating that the recent bounce in prices was primarily driven by spot purchases rather than leverage. said 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.
Federal Reserve Risk
“Just as we saw institutions dress up their risk-asset-conscious balance sheets for year-end and reduce risk ahead of the holidays, we are expected to see price action and demand recovering, especially as we approach to what we hope will be a positive year for the asset class and the next US administration,” Paul Howard, senior director at cryptocurrency trading firm Wincent, told CoinDesk in a Telegram message.
“My personal opinion is not to read too much into these levels. [BTC over $100,000] as we can expect volatility to increase over the next fortnight,” Howard added.
Crypto analytics firm 10x Research also forecast a rally in cryptocurrency prices in early January ahead of President-elect Trump’s inauguration in a report on Monday, but warned of a sell-off at the end of the month ahead of the meeting. January of the Federal Reserve.
Fed Chair Jerome Powell’s hawkish comments at the December meeting marked the start of a pullback in risk assets, and 10x Research noted that it would take time for the Fed to reverse its stance even if inflation cools further more in the coming months.
“The main risk remains the Federal Reserve’s communication, especially if new inflation concerns emerge,” said Markus Thielen, founder of 10x Research. “We anticipate lower inflation this year, although it may take some time for the Federal Reserve to formally recognize and respond to this change.”
“While some excitement is expected at the start of the new year, this is not the time for the same level of optimism that we experienced from late January to March 2024 or from late September to mid-December,” he added.
