During the past week, Bitcoin fell below the $93,000 mark, triggering a correction in other cryptocurrencies. The overall market capitalization managed to stay above $3 trillion, according to a correspondent from the business information center Kapital.kz.
On the morning of November 22, Bitcoin reached a new all-time high of $99,600. The asset needed to gain just 1% to reach a six-figure value. However, on November 24, the price of the first cryptocurrency dropped below $96,000. This followed a sharp increase in daily realized profits to a record $443 million, as reported by analysts at CryptoQuant. The significant profit-taking ultimately reduced the price of Bitcoin to $92,000. Experts believe that the current rally is far from over. The movement of Bitcoin towards the psychological $100,000 mark was halted due to the liquidation of long positions worth $430 million and concerns over inflation metrics and Federal Reserve protocols, concluded CryptoQuant. Analysts also highlighted an outflow of funds from BTC-ETFs amounting to $438 million. The situation may have been worsened by the Thanksgiving celebration in the U.S. on November 28. Additionally, MicroStrategy’s purchase of 55,500 BTC for $5.4 billion acted as a trigger for the reversal. Implied volatility shifted towards put options, as the "market took a breather," analysts concluded.
CryptoQuant's CEO, Ki Yun Joo, emphasized that the current pullback is not "excessive." Prices have reverted to last week's levels. "After the elections, the market became extremely overbought due to excessive leverage, making a pause inevitable," he explained. Ki Yun Joo reminded that even in a parabolic bullish trend, Bitcoin is susceptible to pullbacks of 30%. Such corrections were repeatedly observed in 2021. "Just manage risks and avoid panic selling at local lows," advised the CEO of CryptoQuant. Ki Yun Joo's colleagues noted that profit-taking pressure has not yet peaked, as seen after the previous all-time high in March. This leaves room for further price growth. Analysts believe that if momentum persists, the price could rise to $100,000 amid FOMO demand.
The phenomenon company MicroStrategy, despite the rise of the "first cryptocurrency," has not diminished its appetite for accumulation. Analysts at brokerage firm Bernstein concluded that by the end of 2033, MicroStrategy would increase its Bitcoin reserves from 1.7% to 4% of the total coin supply. "In our view, MicroStrategy's Bitcoin treasury model is unprecedented for Wall Street," the experts noted. Given the positive dynamics, the broker adjusted its price forecast for MicroStrategy (MSTR) shares from $290 to $600 by year-end. Specialists stated that Bitcoin has entered a long-term bullish cycle amid expectations of support from the new U.S. government. Due to the nature of MicroStrategy's debt obligations, risks to its balance sheet remain minimal despite the asset's volatility. The company is also exceeding its plan to raise $42 billion in capital over the next three years, having raised nearly $10 billion just in the last month. According to Bernstein's estimates, in the "base" scenario, by the end of 2033, MicroStrategy will acquire 4% of Bitcoin's issuance—its reserves will reach approximately 830,000 BTC at a price of $1 million. On November 25, MicroStrategy founder Michael Saylor announced the purchase of an additional 55,500 BTC at an average price of about $97,862. Currently, the company holds 386,700 BTC. The coins were purchased at an average price of $56,761 for a total of around $21.9 billion. According to Michael Saylor, the yield on MicroStrategy's Bitcoin reserves has increased by 35.2% since the beginning of the quarter and by 59.3% year-to-date.
However, not everyone is confident in the success of such a large bet on "digital gold." Bloomberg Opinion expert Lionel Laurent believes that MicroStrategy's strategy of buying Bitcoin using debt financing is unsustainable in the long term. Primarily, MicroStrategy uses equity and debt capital to acquire digital gold. The expert simplified the company's actions: raising financing, buying cryptocurrency, rising stock prices alongside Bitcoin, and returning to the market to repeat the cycle. Investors view these investments as an indirect purchase of the digital asset. Meanwhile, Bitcoin has risen by about 120% since the beginning of the year, while MicroStrategy shares have surged approximately 650%. The company is valued at 2000 times the size of projected profits for next year. Lionel Laurent compared the situation to a financial glitch in a video game: "profitable, exciting, and likely unstable." "The amusing part of any glitch is the ability to print huge amounts of money that seem disconnected from reality," he emphasized. Lionel Laurent acknowledged that MicroStrategy's current Bitcoin holdings worth around $24 billion significantly exceed its debt obligations of $4.3 billion. However, plans to raise $42 billion over the next three years raise questions about the sustainability of the scheme given the risks. He considers one of the threats to MicroStrategy to be a potential drop in cryptocurrency, which historically has exhibited declines of 50% or more. A crash would trigger a "vicious cycle of write-downs and asset sales for the company." "Even without a crypto apocalypse, MicroStrategy's model will face the need to pay its bills. Shares are becoming an increasingly expensive Bitcoin proxy in a saturated market for such products—the market capitalization is nearly four times the value of reserves in BTC," the commentator summarized. He noted that the disclosed short position by Citron Research on MicroStrategy shares could be a wise move. Since its opening, the company's stock has dropped by 16%, while the price of the first cryptocurrency has risen. "Saylor has created his own cult in the financial markets. The question now is how blind his followers are to the anticipated risks in the future. For MicroStrategy, which has bet on an incredibly large borrowing plan, this endless cash glitch won't last forever," concluded Lionel Laurent. BitMEX analysts labeled as "extremely unlikely" the scenario in which MicroStrategy liquidates its Bitcoin reserves due to market conditions. They estimate the asset would need to fall to $15,000 for that to occur.
Despite the debates surrounding MicroStrategy's strategy, the main question in the market remains the same—what will be the peak level of Bitcoin in the current cycle. VanEck specialists confirmed their September forecast, stating that the target price for the first cryptocurrency in the current cycle will be $180,000. Analyst Nathan Frankovits and head of digital asset research Matthew Sigel shared the opinion that the next phase of the bull market is just beginning. In their view, this is indicated by a number of key indicators. The experts drew parallels with Bitcoin's rally at the end of 2020, occurring amidst the previous U.S. presidential election. At that time, the asset's price doubled and continued to rise the following year. The regulatory clarity anticipated from the Trump administration, according to VanEck analysts, will act as a catalyst for further Bitcoin growth. They also noted that perpetual futures financing rates have consistently exceeded 10% since November 12. Analysts estimate that such figures reflect optimistic investor sentiment and significant advantages for mid-term investments. Experts believe that retail interest in cryptocurrencies is still far from the peaks of 2021. This is evidenced by data on the number of Google search queries and the number of downloads of the Coinbase app in the U.S. "While we continue to monitor signs of overheating, we affirm our cyclical target price of $180,000 for Bitcoin, as a number of key indicators we track continue to give the green light for this rally," said VanEck analysts.
Market attention has also turned to the second-largest cryptocurrency by market capitalization—Ethereum. Although it has not yet demonstrated impressive results, investor hopes remain alive. Bitget CEO Gracy Chen is confident that the asset will set a new historical high by the end of the year. The previous record of $4,880 for Ethereum was recorded in November 2021. In her opinion, this will be supported by Ethereum's dominant position as the leading smart contract platform and a possible influx of capital as Bitcoin's growth slows. "Ethereum remains the most used smart contract protocol by volume, and targeted upgrades enhance its utility," emphasized the head of Bitget.
Memecoins, which have become a hallmark of the current growth cycle, also deserve special attention. These tokens appeared out of nowhere, created a lot of noise, and just as suddenly disappeared, enriching their creators and a few lucky investors. According to researchers at CoinWire, prices for 86% of memetokens promoted by influencers on social media over the past three months have plummeted by 90% or more. They studied 1,567 coins and the accounts of 377 bloggers with over 10,000 followers. Using data from Dune Analytics, they assessed the price movements of tokens since their initial market debut, current prices, and prices after promotional campaigns: one week, one month, and three months later. Over one week, 80% of memecoins promoted by bloggers lost 70% of their value. After a month, 90% of these tokens fell by 80%. After three months, the price of 86