Bitcoin prices experienced intense volatility leading up to the Christmas holidays, reflecting a broader market reaction among investors. At one point, the price fell sharply from approximately ¥15.5 million to ¥14.5 million, representing a decline of over one million yen, before rebounding to its original levels. This erratic trading pattern, also seen during the same festive period in 2017 and 2020, signals the season's typical market adjustments as institutional investors shift positions.
On December 20-21, Bitcoin's spot market saw significant selling pressure driven by spot market orders. The implied volatility (IV) dipped below its 24-hour low, indicating an over-sold condition which led to rapid recovery as derivative market investors responded to the price drop. A recent report from CoinPost highlighted how the personal consumption expenditures (PCE) data from the U.S. fell below market predictions, easing inflation concerns and bolstering investor risk appetite.
By December 20 at 23:00, the derivatives market continued to reflect prices significantly lower than the cash market, exacerbated by selling pressure primarily from long-term holders. According to data from Glassnode, long-term holders, defined as those who have held Bitcoin for over 155 days, had been selling off aggressively, especially notable on December 19 when they sold approximately 70,000 bitcoins, marking the fourth-largest single-day sell-off of the year.
Meanwhile, the cryptocurrency's appeal is beginning to resonate beyond just the investment community. Luxury retailers are increasingly exploring the acceptance of Bitcoin as payment, with notable brands like LVMH, Gucci, and Balenciaga at the forefront. The French department store Printemps has partnered with Binance and Lyzi to accept Bitcoin and Ethereum, positioning itself as the first major European department store to do so.
David Prinke, President of Binance France, noted the heightened interest from luxury brands, stating, "We have received numerous inquiries and interest expressed."
The interest extends to the luxury goods sector, where goods prices are seeing new highs due to the recent Bitcoin surge, with the cryptocurrency peaking at over $100,000 earlier this month. This surge has prompted more retailers to assess the viability of integrating cryptocurrency payments within their operations.
Despite the optimistic outlook, persistent concerns about Bitcoin's volatility remain. The recent surge did not escape the specter of regulatory scrutiny. Analysts warn about the potential backlash from authorities, who have classified cryptocurrencies like Bitcoin as risky assets with limited real-world utility. So far, proposed regulations aimed at easing restrictions on cryptocurrencies have not come to fruition. With Bitcoin’s performance viewed as tied to regulatory changes, sentiment shifts are seen as potentially destabilizing.
Still, optimistic projections suggest demand could increase if regulatory environments favor cryptocurrency use. Former president Donald Trump, who is rumored to advocate for lighter regulation on cryptocurrencies should he be re-elected, has reportedly garnered significant donations from the crypto sector, hinting at future policy changes favorable to Bitcoin.
Anthony O'Neill, senior analyst at S&P Global Ratings, emphasized the luxury sector’s pursuit of high-net-worth clients as they look to innovate their brands. Among them, Kering's Digital Director Gregory Butte remarked on the company’s approach being one of trial and error rather than caution.
