2 Key Drivers of a Surprise Year-End Crypto Rally

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As a seasoned crypto investor with a few years under my belt and a knapsack full of lessons learned the hard way, I find myself cautiously optimistic about the current market situation. The past ten days have been a rollercoaster ride, to say the least, but the recent data points towards an unexpected turn of events that could potentially be beneficial for my portfolio.

Over the last ten days, the cryptocurrency market has experienced a noticeable downturn instead of the hoped-for holiday surge known as the Santa Claus rally.

As we near the close of the year, it appears that the current trends may undergo an unanticipated shift based on my analysis of on-chain data.

Trading Volumes Mean Gains?

During the latter part of 2024, Bitcoin experienced an impressive surge. Starting from around $70,000, it soared past $108,000 within approximately two months following the US presidential elections. However, on a more detailed level, the asset has been facing some turbulence over the last ten days. It dropped from its record peak to $92,000 in just a few days and now stands at around $94,000.

Additionally, it’s not surprising that trading activity has decreased over the last week due to the holiday period. However, this decline might potentially trigger a price increase as suggested by data from Santiment.

In periods when trading activity is low, whales become significantly influential if they persistently increase their holdings.

Towards the end of 2024, cryptocurrency trading activity has significantly decreased across all sectors. To be precise, there was a 64% drop in trading volume this week as compared to the one before it, which incidentally contained Bitcoin’s record high.

The trading downtrend of trading, particularly among speculative…

— Santiment (@santimentfeed) December 27, 2024

Recently, numerous big-time investors have been actively purchasing various types of assets beyond Bitcoin. Interestingly, during such periods, speculative altcoins become particularly sensitive to price surges, a situation that might favor meme tokens like Dogecoin (DOGE).

According to data from Ali Martinez, it appears that significant Dogecoin investors (whales) took advantage of recent market dips to buy even more of this popular meme coin over the last few days.

Whales bought over 90 million #Dogecoin $DOGE in the past 48 hours!

— Ali (@ali_charts) December 27, 2024

Stablecoins on Binance

Another significant aspect is the increasing stockpile of stablecoins on the world’s leading cryptocurrency exchange, Binance. This platform has experienced a substantial influx of these assets, usually used for amassing Bitcoin (BTC) or other altcoins. As per CryptoQuant, Binance now controls approximately $29 billion in USDT and USDC, suggesting its crucial role in maintaining liquidity and market stability during this rapid expansion period.

The report states that digital currencies such as USDT and USDC are essential for traders and financial institutions, acting as an intermediary between traditional (fiat) money and cryptocurrency. This allows for smooth trading even during turbulent market conditions. The report’s findings suggest that the recent increase in these two largest stablecoins by market value is a positive sign, or a “bullish signal.

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2024-12-28 15:02