Will Santa Bring Bitcoin a Rally?
Every year, equity markets experience a Santa rally in the weeks leading up to Christmas. However, this year, the rally could be far more significant, thanks to the United States Federal Reserve, the Securities and Exchange Commission, and BlackRock.
The Fed's Interest Rate Decision
The Federal Open Market Committee (FOMC) recently held its penultimate meeting of the year and decided to keep interest rates steady. The Fed's aggressive rate hikes have successfully tamed U.S. inflation, which has dropped from 9.1% in June 2022 to 3.7% currently. However, concerns about higher rates triggering a recession remain.
Inflation Reading and Market Impact
If the next Bureau of Labor Statistics inflation reading shows a decrease, investors can expect money to flood into risk assets as they anticipate a rate cut. This will have a positive impact on equity and bond markets. Crypto markets, including Bitcoin, will also follow suit as they remain correlated to the main markets.
Bitcoin ETF Approval and Market Boost
The approval of the first U.S.-based Bitcoin spot ETF, likely to come before Jan. 10, is expected to provide an extra boost to the market. Rumors of BlackRock's application approval have already generated excitement and pushed Bitcoin back up to $35,000. This approval has the potential to be the greatest driver of crypto markets since the Covid pandemic.
Potential Challenges Ahead
Potential challenges that could impact the year-end rally include higher U.S. inflation and escalating tensions between Israel and Palestine. However, the current direction suggests these challenges may not hinder the rally.
A Year of Growth and Challenges
Bitcoin has already experienced significant growth this year, despite the FTX crash in November 2022. While some crypto investors have made gains, many are still nursing losses. However, as we approach the end of the year, it's important to reflect on the resilience of crypto and its positive ending.
This article is for general information purposes and does not constitute legal or investment advice. The views expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.
