Over 35k Bitcoin for Christmas? Thanks to Jerome Powell if it happens
Historically, the Santa Parade is held in the weeks leading up to Christmas when collective goodwill bleeds into the fair markets. This is typically a seasonal eclipse and nothing to write home about. But this year, we could see a more significant rally as the US Federal Reserve, the Securities Exchange Commission and BlackRock line up to provide cheers.
The Federal Open Market Committee (FOMC) It concluded its final meeting of 2023 on Wednesday, and decided to keep interest rates on hold. As we know, US inflation is now down from 9.1% in June 2022 to 3.7% thanks to a cycle of federal interest rate hikes that brought the federal funds rate to 5.25-5.5% – the highest level since then. In 2001
However, while this campaign has undoubtedly been successful, markets are very concerned about higher rates or rates staying at these levels to trigger a recession in the US. Inflation.
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If the next Bureau of Labor Statistics inflation reading on November 14th shows a downward trend, we can expect to see money flowing into risk assets as investors anticipate a cut in the next interest rate decision. This will certainly have a positive impact on the equity markets, and bond markets as the commodity market slows and the back end strengthens.
GUNDLACH: Think the CPI will go down based on the inflation model
— *Walter Bloomberg (@DeItaone) November 1, 2023
Bitcoin (BTC) is closely linked to major markets followed by Crypto markets. What will provide an additional shot in the arm, however, will be the approval of the first US-based Bitcoin spot ETF – which could come before January 10, as predicted by JP Morgan. This underlines the joy that has arisen in the last few weeks from the rumors of the approval of BlackRock's application, which sent Bitcoin back to $35,000 from the pre-Terra Luna days of 2022.
The eventual approval will provide additional impetus to the Bitcoin, Ether (ETH) and larger altcoin markets. However, if investors are following the old adage “buy the rumor, sell the fact,” it probably won't be a big deal. We see a small baptism before a more continuous procession. However, there is no doubt that approval will be positive for cryptocurrency. The conditions created by the Covid pandemic have the potential to be a long-term driver of crypto markets as they see BTC peak at $60,000 in 2021.
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Potential spanners in the works could include high US inflation before the end of the year and heightened tensions between Israel and Palestine. Either of these could put the brakes on Santa's parade later in the year – but that doesn't seem to be the direction of travel right now.
Indeed, Bitcoin has already had a great rally this year. In the year In November 2022, BTC fell to $15,000 due to the fall of FTX and started 2023 at a price slightly above $16,000, while the current level of $34,000 to $35,000 represents more than 100% growth. In fact, only very smart or lucky traders are able to take advantage of Bitcoin's high volatility. Year after year, many crypto investors are still making losses.
For FTX investors, for example, while some hope to get their Bitcoin, Ether and other tokens back, most face a Pyrrhic victory as they face a barrel of 60% to 70% losses. This shows the general pessimism in the crypto market, which otherwise looks like a winner for 2023.
As we approach the end of the year, it's good for all of us to take a step back and look at the Bitcoin and crypto markets with fresh eyes. Even if we don't get the much-awaited and perhaps deserved Santa parade, we can celebrate that crypto survived another challenging year and ended on a high note.
Lucas Kiely is the Chief Investment Officer of the Product Application where he oversees investment portfolio allocations and leads the expansion of the diversified investment product range. He was previously Chief Investment Officer at Diginex Asset Management, and was Senior Trader and Managing Director, QIS and managed the structured derivatives business at Credit Suisse in Hong Kong. He was Head of Special Derivatives at UBS in Australia.
This article is not intended for general information purposes and should not be construed as legal or investment advice. The views, ideas and opinions expressed herein are solely those of the author and do not necessarily represent the views and opinions of Cointelegraph.
