In the near term, investors are likely to shift their attention towards altcoins, perceived as having greater potential for profits, especially after Bitcoin’s recent surge past $100,000 in early December.
In November, Bitcoin’s price increased by over 50%, achieving a record high of $99,600, and continued to climb in December, reaching $103,607.
A major driver of this rally was the victory of Donald Trump in the US presidential election, whose pro-cryptocurrency policies—including hints at establishing a national Bitcoin reserve and promoting US Bitcoin mining—have fueled market optimism.
Woramet Chansen, an investment advisor at Merkle Capital, stated that Bitcoin and the wider crypto market, especially the Ethereum ecosystem, hold strong growth potential through December and into 2025.
Key factors influencing this outlook include the effects of the US election, growth within the Ethereum ecosystem, and a decline in Bitcoin’s market dominance.
According to Mr. Woramet, Trump’s election has raised expectations for the crypto market both in the short and long term. He noted that Trump has shown a more pro-crypto position than any prior US presidential candidate, including the announcement of a new Securities and Exchange Commission chair who would promote favorable regulations for cryptocurrencies.
These developments have already significantly influenced Bitcoin’s price, and support for the crypto market is projected to persist for four years.
Mr. Woramet highlighted that investments in the Ethereum ecosystem have been on the rise. Following the US election, there has been an increased appetite for riskier assets, leading to Ethereum’s impressive 56% surge in November, driven by strong buying from the Ethereum spot exchange-traded fund, which reached a record high.
This growth indicates a growing willingness among institutional investors to take on higher-risk assets.
When evaluating the investment landscape for cryptocurrencies, Mr. Woramet noted that the total value locked in the Ethereum network has increased substantially, reaching as much as $70 billion, signaling that the Ethereum ecosystem could be a focal point in December, particularly for emerging technology sectors with solid fundamentals and undervalued market caps.
He pointed out that Bitcoin’s dominance has decreased, reflecting a trend toward increased risk-taking. In late November, Bitcoin’s dominance, measured against the overall crypto market, dropped, showing a shift as funds began to flow into altcoins.
He mentioned that Bitcoin has a crucial support level at 53% dominance, which may encourage more capital to enter altcoins throughout December.
Historically, Bitcoin’s dominance tends to rise to around 70% before transitioning into a cycle favoring altcoins. Therefore, altcoins possess significant short-term growth potential. However, in the medium term, capital may shift back to Bitcoin as altcoin prices exceed market expectations, according to Mr. Woramet.
Mana Khanijou, chief commercial officer at Merkle Capital, stated that the final quarter of 2024 is anticipated to yield strong returns for the digital asset market, influenced by macroeconomic factors, particularly the outcomes of the US election.
“I advise careful planning for your investments while maintaining an acceptable risk level,” he said. “Since all investments carry risks, it’s essential to conduct thorough analyses before making any decisions.”
