Cramer Strikes Again: Bitcoin Hits $100K Resistance, Can It Break the 'Cramer Curse' Before Year-End?
Digital Asset Market: Bitcoin’s recent surge toward $100,000 triggered significant profit-taking by long-term holders, who sold approximately 550,000 BTC—around 4% of their total holdings—resulting in a 7.6% price drop since November 22nd. This sell-off coincided with Jim Cramer labeling Bitcoin a “winner,” a statement that fueled memes due to his reputation for market calls preceding reversals. The humor was amplified as Bitcoin failed to sustain its upward momentum, illustrating the volatility of the market during euphoric phases.
Such profit-taking by "smart money" holders is a typical feature of bull markets, creating temporary selling pressure that historically diminishes over time. Each cycle has seen smaller percentage drops from long-term holders, pointing to a likely short-lived downturn. With Bitcoin's long-term supply trends maintaining higher lows and highs, the foundation for future price recovery and growth appears robust, even amid short-term fluctuations.
Macro Economics: On Monday night, President-elect Donald Trump announced plans for a blanket 25% tariff on Mexico and Canada and 10% new duties on China "above any additional tariffs," citing drugs and illegal immigration as the main reasons. This has been met with resistance from the Chinese Embassy, with a spokesperson stating that "no one will win a trade war." However, the implementation of these tariffs is still uncertain as negotiations between the US and its top trading partners will take place. The potential for a trade war and its potential impact on the global economy has sparked concerns. Mexican President Claudia Sheinbaum has threatened counter-tariffs in response, blaming the US for the drug epidemic and border security issues. Trump's previous tariffs on Chinese products and threats to end exemptions for low-value goods have added to the market's uncertainty. The decline in the value of the Mexican peso reflects the market's reaction to Trump's threats.
Equities: US stock markets closed higher on Tuesday despite President-elect Donald Trump's threat to impose tariffs on China, Canada, and Mexico. The S&P 500 and Nasdaq rose, while the Dow Jones Industrial Average dropped due to poor performance by drugmaker Amgen. Trump's pledge to impose tariffs sparked fears of a potential trade war and also raised concerns about the role of Treasury Secretary nominee Scott Bessent in controlling the new administration's policies. European carmaker stocks slumped, and the Mexican peso and Canadian dollar decreased in value. The Fed minutes, later on Tuesday, will be closely watched for indications of future interest rate cuts. US equity futures initially dropped but then rebounded, and the dollar spiked but later fell after Trump's announcement. Earlier today, S&P 500 and Nasdaq futures were up, while European and Asian stocks fell, reflecting concerns about the impact of Trump's policies on US exporters.
The Fed and US Treasury: Traders are waiting to parse Federal Reserve meeting minutes for any clues on the central bank's future policy decisions, especially in light of President Trump's trade and fiscal policies and their potential impact on inflation. Minneapolis Federal Reserve President, Neel Kashkari, has expressed openness to another rate cut next month. Traders are divided on the likelihood of a rate cut in December with 56% expecting a rate cut in December.
President-elect Donald Trump and Federal Reserve Chair Jerome Powell have conflicting views on rate policy for 2025. Trump has criticized the Fed for not lowering interest rates quickly enough, while Powell has stressed the importance of the Fed's independence from political pressures. With Trump's plans for expansionary fiscal policy, the Fed may be under pressure to hold tougher on monetary policy if inflation flares up. This could lead to tensions between the White House and the Fed, as they try to navigate economic circumstances and find a neutral rate of interest. Powell's term ends in 2026, and it is likely that Trump will bring in a new Fed Chairman.
Geopolitical: After months of intense fighting, the Israeli cabinet has approved a ceasefire in Lebanon. The ceasefire is expected to take effect on Wednesday, and both Israeli and Lebanese leaders are expected to make an announcement about it. However, some Lebanese residents are skeptical about whether it will hold. In the meantime, the Israeli military has intensified its airstrikes on Hezbollah strongholds in southern Lebanon and has also expanded its ground offensive, pushing further north than before. Israeli politician Naftali Bennett has raised concerns that the ceasefire does not address the issue of Hezbollah's remaining weapons and potential for rearming. Israel wiped out much of Hezbollah's leadership before the ground invasion, so any value gained from this ground invasion is not clear. War fatigue is taking over the country, and the IDF is facing difficulty in replenishing reservists.
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Bitcoin faced significant resistance at the $100K level, as long-term holders took profits and options sellers worked to prevent it from crossing this threshold, where a large volume of short options expire. Additionally, 25-delta risk reversals indicate a volatility skew to the downside, reflecting caution in the market. Flows from cryptocurrencies and stablecoins to USD have also reversed. However, this pause appears temporary. We anticipate another push toward $100K before year-end, with diminished resistance from profit-takers and options constraints, potentially allowing Bitcoin to break through this critical level.
Traditional financial markets are currently focused on President Trump’s tariff announcements, which aim to impose levies on the U.S.'s three major trading partners: China, Canada, and Mexico. While these announcements have raised concerns, the impacts are unlikely to be immediate, as negotiations are expected to follow. Both Trump and the involved nations are wary of reigniting inflation, which remains a persistent economic challenge. The aggressive rhetoric likely serves as a negotiating tactic, targeting concessions from China, particularly in opening its markets to U.S. investors and private equity firms.
Ultimately, this strategy may favor the financial sector by improving access to international markets but is unlikely to deliver the promised boost to the U.S. labor market. The persistent lack of new jobs despite tariff posturing underscores the complexities of reshaping global trade dynamics. While financial markets may see some benefit, the broader economic challenges tied to labor and inflation remain unresolved.
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The 1Konto Team
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