Signals for Possible Christmas Crypto Rally In December

Major cryptocurrencies such as bitcoin( BTC) and ethereum (ETH ) as well as stocks linked to the cryptocurrency market increased in value after comments made by the chair of the Federal Reserve, Jerome Powell, which suggested that the rate of interest rate hikes would slow down as soon as this December month .

Bitcoin whales, on the other hand, continue to be skeptical in spite of the broad confidence among normal investors for the leading cryptocurrency.

Although Bitcoin and other cryptocurrencies may each have their own shortcomings, at least one thing about them remains the same. The price action is very exciting and seems like you're riding a roller coaster.

Take a moment to reflect on the events of the past two years. From 2021, when things seemed to be going in the right direction, to 2022, when everything appeared to be going in the wrong direction, it has been a tale of two extremes: a very long and bitterly cold crypto winter , and also for most in Europe facing energy shortage due to the War 

First, the Terra/Luna stablecoin suffered a humiliating collapse , and then, just as the cryptocurrency market was beginning to show signs of improvement, FTX announced that it would be filing for bankruptcy. As we approach closer to the end of the year, news reports surface regarding the bankruptcy filing of cryptocurrency lender BlockFi. 

Yet , just announced Brazil has approved a bill that will legitimize cryptocurrency payments, despite the continued consequences from the collapse of the cryptocurrency exchange FTX, which cost many billions of dollars.

The aggressive raising of interest rates by central banks is diminishing the availability of cheap capital, some of which finds its way into riskier assets like as cryptocurrencies. This is a direct result of the aggressive raising of interest rates by central banks. It would appear that cryptocurrencies may possible to have its part in the seasonal surge that is occurring end of the month of December 

After spending much of the previous month below $17K in the wake of the failure of the cryptocurrency exchange FTX, the price of bitcoin (BTC-USD) increased by 3.6% to $17.04K . 

 The players in the market expressed their approval of Powell's words. The value of one Ether increased by 5.6 percent and reached $129,300. 

In addition, despite a severely inverted yield curve that forecasts economic contraction, the stock market rallied strongly, with all three major U.S. stock indices increasing by almost 2.5%. This was the case despite the fact that the inversion of the yield curve is a leading indicator of economic contraction.

The crypto winter may be seen since 2021 Bitcoin (BTC) has underperformed practically every other asset class, including equities, bonds, and commodities, in recent months going into 2023 . This underperformance has been significant. 

The Crypto chart demonstrates that Bitcoin is currently experiencing a severe bear market in comparison to these three major asset classes. And there is no indication that it will take a different path in the not too distant future. One can reasonably expect that investors are transferring their money away from investments with higher levels of risk and into investments with lower levels of risk.

Although inflation is still considerably above the Fed's target of 2%, the chairman of the Fed indicated that the U.S. central bank may begin to moderate the pace of its rate hikes beginning with the meeting that will take place on December 13–14 , where everybody should be planning for Christmas … 

The Federal Reserve has increased its benchmark interest rate by 75 basis points at each of its most recent four meetings. However, traders have been raising their wagers on a 50-bp raise at the December meeting as a result of comments made by Fed officials over the previous month or so that indicated at the possibility of a possible adjustment in the pace of rate increases just on time for a possible Rally in line to Christmas celebration 

Investors have priced in a 76.0% likelihood for a 50-bp raise, which is an increase over the 66 % possibility that was factored in by the FedWatch index . That would reduce the target range for the federal funds rate down to 4.25%-4.50%, which is a decrease from the projection that policymakers made in September, which was for a possible signasl to some recovery for Crypto Cold Wind .

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