Bitcoin (BTCUSD) has had a spectacular run this year, rising to over $100,000, and some analysts expect it to go even higher next year. While that may tempt you into considering investing in it, financial advisors remain cautious about recommending the cryptocurrency to clients and suggest allocating only a small portion of your portfolio towards it.
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Portfolio rebalancing is the process of realigning asset weights in an investment portfolio. In crypto, rebalancing helps manage risk and maintain a desired allocation despite price fluctuations. For instance, if your portfolio is split 60% Bitcoin (BTC) and 40% Ethereum (ETH), a sudden rise in BTC’s price could skew your allocation. Rebalancing restores the portfolio to its target allocation.
Bitcoin’s price is like those chocolate coins you find at the bottom of your stocking: sweet and enjoyable, but ultimately unfulfilling. The best presents are those that bring us joy, sustenance and value over the long-term, complementing the sugar rush of short-term price spikes.
Cryptocurrency also played a key role in stock price increases. The launch of a spot Bitcoin investment ETF in January boosted Bitcoin's credibility, leading to a rally in related stocks after Trump, who once called Bitcoin a 'scam', became more favorable towards it and was elected president.
Since announcing its Bitcoin purchase plan in mid-2020, the company has been selling stock when prices rise and increasing debt to continue buying Bitcoin. It currently holds 444,000 Bitcoins. It is the fourth-largest holder of Bitcoin globally, following Satoshi Nakamoto, BlackRocks iShares Bitcoin Trust, and the cryptocurrency exchange Binance.
Bitcoin prices were fluctuating near the $95,000 level on the evening of Thursday, December 26, after losing almost 5% of their value in less than 24 hours. The world’s most prominent digital currency dropped to as little as $95,083.93 earlier that day, according to Coinbase data from TradingView. The cryptocurrency declined to this level after nearing $99,900 on Christmas Day.
Prediction markets work by letting users trade contracts tied to specific events, with prices fluctuating dynamically based on expected outcomes. They proved to be more accurate than traditional polling, forecasting not only Trump’s win but also his party’s sweep of the US House and Senate.
Most major altcoins were trading with a negative bias around this time including Ethereum (ETH), Tether, XRP, Solana, Dogecoin, Cardano, Tron, Shiba Inu, Toncoin and Avalanche. They were lower by up to 5.5% around this time. However, Tron and BNB were trading in the green and were up by 0.16% and 0.73%, respectively.
BTC and ETH's realized volatility has increased, but short-term options haven't adjusted to this change. This indicates that while spot prices are fluctuating, the options market is not fully reacting to these shifts, although BTC and ETH volumes have displayed slightly different patterns.
BTCs realized volatility has been higher than implied volatility on three occasions, each time reaching a relatively calm equilibrium. Open interest in BTC options remains high, contributing to potential increased volatility as we near the end of the year. Around $360 million worth of BTC options (both puts and calls) are set to expire soon, which can affect price movement.
Meme coins captured the attention of most crypto traders and emerged as a popular narrative this year. A CoinGecko report updated on Monday notes that the meme coin narrative captured a combined 30.67% of global investor interest.
The world of cryptocurrency is evolving rapidly, moving beyond the headlines of Bitcoin’s market dominance and Ethereum’s smart contracts. In 2025, this ecosystem will witness profound changes influenced by global economic trends, regulatory clarity and technological advancements.
Meme coins have outperformed every expectation in 2024, with big names like Dogecoin ($DOGE) and Shiba Inu ($SHIB) seeing between 200% and 400% growth across every metric this year. And they seem to be hanging onto much of these gains, despite some noticeable volatility in recent days over the Fed’s hawkish attitude to crypto.
One of the most significant advantages of meme coins is their ability to drive high volumes of transactions on blockchain networks. Because meme coins often attract a broad range of retail investors, they generate more activity on public blockchains like Ethereum and Binance Smart Chain.