According to a top investor, Bitcoin (BTC) could see a significant rally and hit $35,000 by Christmas if the United States Federal Reserve takes action. The Federal Reserve recently decided to hold interest rates steady, but there are concerns about the potential of higher rates triggering a recession. If the next inflation reading shows a downward move, investors may anticipate an interest rate cut, leading to a flood of money into risk assets and a positive impact on equity and crypto markets. Additionally, the approval of the first US-based Bitcoin spot ETF, expected in early 2024, could provide further impetus for cryptocurrencies.

Bitcoin’s Potential Rally

Bitcoin’s potential rally is linked to the actions of the US Federal Reserve. The recent decision to hold interest rates steady raises concerns about the potential for higher rates triggering a recession. However, if the Bureau of Labor Statistics’ next inflation reading shows a decrease, investors may anticipate an interest rate cut, leading to a positive impact on equity and crypto markets. Furthermore, the approval of the first US-based Bitcoin spot ETF, likely to happen before January 10, could further boost the cryptocurrency market.

Implications of ETF Approval

If the US-based Bitcoin spot ETF is approved, it is expected to provide additional impetus for Bitcoin, Ether (ETH), and other cryptocurrencies. Approving this ETF could be the most significant driver of crypto markets since the conditions created by the COVID-19 pandemic led to Bitcoin reaching $60,000 in 2021. However, if investors follow the adage of “buy the rumor, sell the fact,” a small dip in prices may precede a sustained rally.

Potential Influences

While the potential for a Santa rally in crypto markets exists, there are a few potential factors that could impact the end-of-year performance. These include higher inflation in the US and escalating tensions between Israel and Palestine. However, at present, these factors do not seem to be impeding the crypto market’s upward trajectory.

The Journey of Bitcoin in 2023

Bitcoin has already experienced significant growth in 2023, with prices increasing over 100% from the fallout of the FTX crash in November 2022. However, not all investors have been able to take advantage of Bitcoin’s extreme volatility, and many are still nursing losses. Despite this, the crypto market is ending the year on a high note, celebrating the survival of another challenging year.

About the Author

Lucas Kiely is the Chief Investment Officer of Yield App and has extensive experience in investment portfolio allocations and trading. He previously served as the Chief Investment Officer at Diginex Asset Management and as a senior trader and managing director at Credit Suisse in Hong Kong and UBS in Australia. Kiely is well-versed in the cryptocurrency industry and provides insights into the market and investment strategies.

Frequently Asked Questions (FAQ)

How could the US Federal Reserve impact Bitcoin’s price?

The US Federal Reserve’s actions, particularly regarding interest rates, can have a significant impact on Bitcoin’s price. If the Federal Reserve decides to hold interest rates steady or even cut rates due to lower inflation, it could lead to increased investment in risk assets, including cryptocurrencies like Bitcoin.

What is a Bitcoin spot ETF?

A Bitcoin spot ETF is an investment vehicle that allows investors to gain exposure to Bitcoin without directly owning the cryptocurrency. The ETF tracks the price of Bitcoin and provides an easy way for investors to buy and sell Bitcoin as they would traditional stocks. Approval of a US-based Bitcoin spot ETF could provide further legitimacy and accessibility to the cryptocurrency market.

What is a Santa rally?

A Santa rally refers to a seasonal phenomenon where equity markets experience an upward movement in the weeks leading up to Christmas. This rally is driven by a collective sense of goodwill and optimism among investors. While a Santa rally is often temporary, there are expectations that this year’s rally could be more significant due to various factors, including the actions of the US Federal Reserve.

Should investors expect a sustained rally in the crypto market?

While there is potential for a sustained rally in the crypto market, it is important to consider the volatility and unpredictability of the market. Investors should be cautious and monitor market trends and developments closely. It is also advisable to consult with financial advisors or experts before making investment decisions.

Disclaimer

This article is for general information purposes only and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Sources: Cointelegraph