The holiday season is traditionally a time for festive cheer, and this year, the cryptocurrency market could experience a significant rally thanks to a series of events lined up in the coming weeks. The United States Federal Reserve, the Securities and Exchange Commission (SEC), and BlackRock are all poised to deliver a bonanza of holiday cheer that could boost market sentiment.
The Federal Open Market Committee (FOMC) recently concluded its penultimate meeting of 2023 and decided to keep interest rates unchanged. The Fed’s aggressive interest rate hikes over the past year have successfully tamed U.S. inflation from a high of 9.1% in June 2022 to the current level of 3.7%. However, concerns persist among investors about the potential impact of higher rates on the economy and the possibility of a recession. The Fed itself is now more cautious about inflation.
Market participants are eagerly awaiting the next Bureau of Labor Statistics inflation reading on November 14th. If the data shows a downward trend, it could trigger a flood of money into risk assets as investors anticipate a future interest rate cut. This would likely have a positive impact on equity markets and even bond markets, as yields fall and the yield curve flattens.
The impact of these developments won’t be limited to traditional markets alone. The cryptocurrency market, particularly Bitcoin (BTC), is expected to follow suit and maintain a strong correlation with the broader markets. However, what could provide an extra boost is the potential approval of the first U.S.-based Bitcoin spot exchange-traded fund (ETF). According to J.P. Morgan, this approval is likely to happen before January 10th. Rumors about BlackRock’s application for a Bitcoin ETF approval have already generated excitement in the market and pushed Bitcoin’s price back up to $35,000, a level not seen since 2022.
The eventual approval of a Bitcoin spot ETF is expected to further fuel the growth of Bitcoin, Ether (ETH), and other altcoins. However, there is a possibility that investors who follow the “buy the rumor, sell the fact” strategy may initially cause a small dip in prices before a sustained rally occurs. Nevertheless, there is little doubt that ETF approval will have a positive long-term impact on the cryptocurrency market and potentially become the biggest driver of crypto market growth since the pandemic-induced conditions that led Bitcoin to reach $60,000 in 2021.
Of course, there are potential hurdles that could impact the end-of-year rally, such as higher U.S. inflation or escalating tensions between Israel and Palestine. However, the current trajectory suggests that these factors may not derail the market’s positive momentum.
It is worth noting that Bitcoin has already seen significant growth this year. After experiencing a drop in price following the FTX crash in November 2022, Bitcoin started 2023 at a modest price of just over $16,000. Its current price range of $34,000 to $35,000 represents growth of over 100%. However, not all crypto investors have benefited from this volatility, and many are still nursing losses from previous years.
As the year comes to a close, it is essential to take a step back and appreciate the progress made by the cryptocurrency market amidst various challenges. While there is no guarantee of a Santa rally, the fact that crypto has survived another year and is ending on a high note is reason enough to celebrate.
Lucas Kiely, Chief Investment Officer of Yield App, emphasizes the need for a fresh perspective on Bitcoin and crypto markets, urging investors to consider the broader picture. His experience in managing investment portfolios and trading at renowned financial institutions underscores the importance of staying informed and making well-informed decisions in this dynamic market.
It’s important to note that the views expressed in this article are the author’s own and should not be taken as legal or investment advice. They solely reflect the author’s opinions and do not necessarily represent the views and opinions of Cointelegraph.
In summary, the holiday season could bring about a significant rally in the cryptocurrency market, with the Federal Reserve, SEC, and BlackRock poised to deliver positive developments. The Fed’s decision to keep interest rates steady and the potential approval of a Bitcoin spot ETF are expected to boost market sentiment. While challenges remain, the overall sentiment suggests that the crypto market is ending the year on a high note.