Our weekly feature on Bitcoin. Our experts analyzed the market situation and told how it may change this week
The week that ended on December 10 was a good week for bitcoin. And for investors who prefer long positions, it was extremely favorable. At the beginning of the week bitcoin crossed the $40 thousand mark and, apparently, managed to accumulate strength and consolidate above this level. By the weekend bitcoin came close to the next psychological boundary of $45 thousand, but the growth rate slowed down. Bitcoin will have to force this mark during the week of December 11-17. According to many prerequisites, the first cryptocurrency will manage to do it and get a foothold above $45 thousand.
The main factors in the growth of the crypto market remain expectations that the SEC will soon approve the launch of bitcoin-ETF. And flows of institutional capital will flow into cryptocurrency.
The state of the U.S. economy also gives a strong impetus to the crypto market. Namely, the expectation of a slowdown in inflation in the United States and the beginning of the period of reduction of the key rate by the Federal Reserve Service (FRS). At first glance, the positive dynamics in the Fed’s fight against inflation entails risks of recession in the U.S. economy. A recession along with inflation above the 2% target threatens investors with asset depreciation. This encourages them to hedge risks and move some capital into protective assets. For example, gold, which has shown growth in recent weeks. Or cryptocurrencies, which, although highly volatile, can give a high ROI (return on investment).
Main events of this week
This week, the main attention of cryptocurrency market participants, as well as the stock market, will be focused on the key events of the U.S. economy.
On December 12, the U.S. Federal Bureau of Labor Statistics will release data on inflation in November 2023. The US CPI is expected to rise slightly from October’s level. But the Core CPI (Core CPI), which reveals the trend of hidden inflation. On the contrary, it will slow down year-on-year. The PPI and retail sales data will also be important for the market.
But the main event of the week will undoubtedly be the two-day meeting of the US Federal Reserve on December 12-13 on the key rate. And the following press conference of the Fed’s head Jerome Powell. Market participants do not expect the key rate to change. But high hopes are pinned on Powell’s speech: they are waiting for him to signal the US Fed’s readiness to start reducing the key rate in 2024. And that should stimulate economic growth and investors’ interest in risky assets, which include cryptocurrencies.
The crypto market may be feverish
In the first half of the week, we can expect high bitcoin volatility on the back of the Fed meeting and the publication of inflation data. The crypto market can be feverish – from sharp rises on expectations of the Fed’s decision to a sudden correction right after Powell’s speech. Support levels for bitcoin will be $41-42 thousand, and resistance – $48 thousand.
By the end of the week bitcoin will show how strong the bulls are in the crypto market. And whether they will be able to gather their strength to confidently consolidate above $45 thousand. Given that the deadline for the publication of the SEC decision on applications for the launch of bitcoin – ETF is in early January 2024. It can be expected that in the next month, the upward trend in the cryptocurrency market will continue. Our experts note that while crypto market participants have not received a final answer to the ETF question, they will continue to hope for a quick launch of the exchange traded fund. And their hopes will serve as a basis for the growth of bitcoin price.