The Santa Claus rally in the crypto market is likely to continue with analysts expecting the Bitcoin price to touch $48,000 during pre-spot ETF approval.
Bitcoin and the broader cryptocurrency market are experiencing a state of euphoria after the FOMC meeting on Wednesday, December 13. The Bitcoin (BTC) price is up more than 5% in the last 12 hours advancing past $43,000 levels.
At the same time, the altcoins have advanced even further. Ethereum (ETH) is up by 5% moving past the $2,250 level while Cardano (ADA) and Avalanche (AVAX) have registered double-digit growth.
In its anticipated decision on Wednesday, the US Federal Reserve opted to maintain the benchmark fed funds rate range at 5.25%-5.50%. Concurrently, the central bank adjusted its rate outlook for the end of 2024, lowering it to 4.6% from the earlier projection of 5.1%.
The accompanying statement expressed concerns about the potential impact of tighter financial and credit conditions on economic activity, hiring, and inflation, acknowledging the uncertainty surrounding these effects.
The Fed also unveiled its quarterly economic projections, revealing a shift in expectations. The updated forecast anticipates a core inflation rate of 3.2% at the close of 2023, down from the previous estimate of 3.7%. Similarly, the projected 2024 year-end inflation rate stands at 2.4%, compared to the earlier forecast of 2.6%. Real GDP growth for 2024 has been adjusted to 1.4% from the previous estimate of 1.5%.
Notably, the revised outlook indicates a lower expected fed funds rate of 4.6% at the conclusion of 2024, hinting at the possibility of 75 basis points of rate cuts in the coming year.
The Santa Claus Rally to Continue
Moving ahead, the Santa Claus rally in the crypto market is likely to continue going ahead. Also, the approval of spot Bitcoin ETF in early January 2024 will provide an additional catalyst to the crypto market.
In his analysis, cryptocurrency expert Michael van de Poppe suggests that the Federal Open Market Committee (FOMC) has concluded its session with a dovish stance and is likely to implement rate cuts. He notes a risk-off sentiment for Bitcoin before the FOMC meeting, followed by a bounce back and anticipates a continued upward trend. Van de Poppe sets an overall target for this pre-spot ETF run in the range of $47,000 to $50,000.
Other catalysts could be the positive developments in global macros. Checking the traditional markets reveals a significant decline in rates, as the 10-year Treasury yield experiences a 12 basis points drop to 4.08%, marking its lowest level since August. Meanwhile, U.S. stock market averages have surged to session highs, with the S&P 500 gaining 0.6%. Gold prices have seen a slight increase of just under 1%, reaching $2,013 per ounce, while the dollar index has decreased by approximately 0.5%.
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