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Will Bitcoin Gift Us a Santa Claus Squeeze Rally Before Christmas?

Will Bitcoin Gift Us a Santa Claus Squeeze Rally Before Christmas?

Markus Thielen, Head of Crypto Research and Strategy at Matrixport, suggests a potential pre-Christmas rally in Bitcoin. Thielen cites macroeconomic shifts and recent market movements, where altcoins have outperformed Bitcoin. He refers to this anticipated rally as the "Santa Claus squeeze." Thielen's analysis is supported by historical data of Bitcoin's rally during the festive months. Several macroeconomic indicators, such as a potential interest rate peak, contribute to the optimism. Thielen also notes the potential growth of Ethereum and other altcoins, along with the possible approval of a BlackRock spot Bitcoin ETF acting as a catalyst for a broader rally.

Our analysis of the situation

The crypto market is abuzz with whispers of a potential pre-Christmas rally, and it seems Bitcoin is set to lead the charge. Markus Thielen, the Head of Crypto Research and Strategy at Matrixport, has coined this anticipated surge the "Santa Claus squeeze" – a festive phenomenon that could send crypto prices soaring.

Thielen's optimism stems from recent market movements, where certain altcoins started outperforming Bitcoin, hinting at a momentum build-up that could result in significant gains. But what macroeconomic factors support this jolly forecast?

Historical bitcoin rallies during the festive season have already caught Thielen's attention. His insights report points to an average 23% surge in Bitcoin prices in November and December. Combine this historical trend with last week's altcoin outperformance, and the stage seems set for a year-end rally in the crypto market.

Multiple macroeconomic indicators underline Thielen's conviction. The US Treasury's decision to slow down issuing longer-dated debt suggests a potential decline in interest rates. And as history would have it, lower interest rates often benefit growth assets like tech stocks and cryptocurrencies.

Adding to the mix is Federal Reserve Chair Jerome Powell's recent "dovish" tone during the post-FOMC meeting press conference. Powell's comments sparked positivity by hinting at a potential halt in rate hikes, with the prospect of cuts in 2024. Additionally, Powell's unwavering confidence in the economy's resilience offered reassurance that a recession is not on the horizon.

Last Friday's less-than-stellar US nonfarm payroll report, which indicates a weakening labor market, further supports Thielen's belief that aggressive rate hikes are improbable in the near future.

Now, let's talk about the potential rally magnets – Bitcoin and Ethereum. Looking back at January 2019, the end of the last Fed rate hike cycle led to a significant 400% surge in Bitcoin's price. While Thielen advises against expecting equally sensational gains this time, he anticipates substantial growth for Bitcoin and what he calls "higher beta crypto assets" in the coming years.

Moreover, Thielen cites the potential approval of a BlackRock spot Bitcoin ETF as a catalyst for a more widespread crypto rally. This, combined with Ethereum's resilience in holding the crucial support level of $1,550 and its growing market dominance, paints an encouraging picture for the second-largest cryptocurrency and its ecosystem.

As of now, Bitcoin has seen a modest 1.3% increase in the past week and 0.3% in the past day, while Ethereum has clocked a higher gain of 5% over the past 7 days and 1% in the last 24 hours. Bitcoin currently trades at $34,987, and Ethereum sits at $1,897 at the time of writing.

While we eagerly await the outcome of this potential "Santa Claus squeeze," one thing is certain – the crypto market is brimming with anticipation and excitement. So, fasten your seatbelts, dear readers, as we embark on a thrilling holiday crypto ride.

[Featured image from Unsplash, Chart from TradingView]

Disclaimer: Our articles are NOT financial advice, and we are not financial advisors. Your investments are your own responsibility. Please do your own research and seek advice from a licensed financial advisor beforehand if needed.
Image(s) are provided by Unsplash or other free sources. They are illustrative and may not represent the content truly.

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