Mike Smith
Nov 22, 2024
Bitcoin's rapid movement towards the $100,000 mark is attracting more and more attention from the investment community. BlackRock IBIT has taken a leading position among exchange-traded funds, and trading volumes of cryptocurrency instruments, including MicroStrategy (MSTR) shares, have reached unprecedented levels. However, behind the impressive growth dynamics, Blofin Academy specialists see serious risks that can significantly affect the market situation.
Experts point to the problem of growing financing costs as a key risk factor. An increase in repo rates and an increase in the share of positions through sponsored repos are creating additional tension in the market. By the end of November, the rate rose to 5.6%, significantly exceeding the Federal Reserve's figures, which could become a significant obstacle to the further development of the market rally.
The situation in the alternative cryptocurrency segment is even more worrying. The growth of financing through derivatives is accompanied by an increase in investment costs. A case in point is Ethereum (ETH), where annual funding costs have exceeded 40%, which significantly reduces the sustainability of such investments. Bitcoin has demonstrated greater stability so far due to the balance of the spot market.
Global economic trends are also putting pressure on the cryptocurrency market. The dollar index (DXY) has reached its highest levels in the last year, and rising US bond yields are negatively affecting the cost of collateral for repo transactions, increasing funding costs.
The options market is signaling increasing volatility risks. The December expiration of large options may lead to the disappearance of price support from market makers early next year. Despite the prevailing optimism of market participants, approaching the psychological mark of $ 100,000, combined with a high level of risks and a seasonal decline in activity during the Christmas holidays, creates the preconditions for a possible correction in the near future.
