Championed by Chairman Jerome Powell, the Federal Reserve has put the brakes on raising interest rates. The big question: will this be enough to keep the market thriving through Christmas?
Traditionally, a ‘Santa rally’ brings positive vibes to the stock market in the weeks before Christmas. This year, it might be more significant as the U.S. Federal Reserve, the Securities and Exchange Commission, and BlackRock team up to spread some holiday cheer.
The Federal Open Market Committee (FOMC) just wrapped up its second-to-last meeting of the year, deciding to keep interest rates steady. Despite successfully curbing U.S. inflation from a high of 9.1% in June 2022 to 3.7%, there’s still concern about the impact of higher rates. Investors are watching for signs of a rate cut after the next inflation reading on Nov. 14.
If the Bureau of Labor Statistics indicates a drop in inflation, money is expected to pour into risk assets, benefiting equity and even bond markets. Crypto markets, especially Bitcoin, will likely follow suit. The potential approval of the first U.S.-based Bitcoin spot ETF, predicted by J.P. Morgan before Jan. 10, could further boost the market. Rumors of BlackRock’s application approval have already pushed Bitcoin back to $35,000, a level not seen since 2022.
While approval could fuel Bitcoin, Ether, and many altcoins, investors should be cautious of the “buy the rumor, sell the fact” scenario. There might be a small dip before a more sustained rally. Nevertheless, approval has the potential to be a major catalyst for crypto markets.
Possible challenges include higher U.S. inflation and escalating tensions between Israel and Palestine. Either could derail the end-of-year rally, but current trends suggest otherwise.
Bitcoin has already experienced a notable rally this year. Despite the FTX crash in November 2022 causing a drop to $15,000, it has rebounded to $34,000-$35,000, reflecting over 100% growth. However, many crypto investors, especially those affected by the FTX crash, are still recovering from losses.
As we approach the year’s end, let’s take a moment to reflect on Bitcoin’s journey. Even without a guaranteed Santa rally, we can appreciate that crypto has survived another challenging year and is finishing on a positive note.”
This information is not legal advice. Do your own research before making any decisions. Only invest what you can afford to lose and seek independent financial advice if needed. Understand the risks involved before purchasing any cryptoassets.