InvestMacro

• Bitcoin ↑ 152% since start of 2024

• Over past year Fed triggered moves of ↑ 3.4% & ↓ 3%
  

• Gained on average 11.30% in December over past 15 years

• Technical levels – $110,000, $107,000 & $100,000

Christmas may have come early for investors after Bitcoin surpassed $107,000 for the first time.

The “OG” crypto has been on a tear, recently boosted by growing optimism over its potential role as a US strategic reserve asset.

Prices are up over 10% month-to-date, pushing 2024-year gains beyond 150%.

Bitcoin and other cryptos remain supported by hopes of a more friendly regulatory environment under Trump. And this has attracted almost $10 billion into US exchange-traded funds since Trump’s election win on November 5th.

Another factor exciting bulls could be MicroStrategy…

MicroStrategy is the largest Bitcoin holder among publicly traded companies, accumulating 439,000 bitcoins valued at $47 billion.

The meteoric rise of Bitcoin has pushed MicroStrategy’s market cap to almost $100 billion with its shares up nearly 550% year-to-date.

Why does this matter?

MicroStrategy is set to join the Nasdaq 100 on December 23rd.

This is a major milestone for the company and crypto world given its massive exposure to Bitcoin.

Joining the Nasdaq 100 provides investors an indirect exposure to Bitcoin through investing in MicroStrategy.

In a nutshell, this is a welcome development for the crypto space and could fuel upside gains on both MicroStrategy and Bitcoin.

Bitcoin set for “Santa Rally”?

To be clear, the Santa rally is a phenomenon that happens in the stock market. This is where stock prices experience a rally in the final days of December through the first few days of January.

Historically speaking, Bitcoin has gained on average 11.30% in December over the past 15 years.

Given the positive sentiment toward cryptocurrencies, could a rally be on the horizon?

By the way…

The Fed decision on Wednesday could influence Bitcoin which has shown sensitivity to interest rates.

As discussed in the week ahead, the Fed is widely expected to cut interest rates by 25 bp.

Traders are currently pricing in a 97% probability of a 25 bp rate cut on Wednesday with the odds of another cut by March 2025 at 62%.

Over the past year, the US jobs report has triggered upside moves of as much as 3.4% or declines of 3% in a 6-hour window post-release.

Beyond the Fed decision, the revised US GDP and PCE report among other data could influence prices.

It’s not only Bitcoin that may experience big moves on Wednesday 18th December. 

• DOGECOIN: ↑ 7.5 % or ↓ 4.1%

• AVALANCH: ↑ 6.0 % or ↓ 4.0%

• BITCOINC: ↑ 5.5 % or ↓ 3.0%

• CARDANO: ↑ 5.3% or ↓ 2.7%

• CHAINLINK: ↑ 4.7 % or ↓ 2.4%

• POLYGON: ↑ 4.0% or ↓ 3.0%

• ETHEREUM: ↑ 3.9% or ↓ 2.4%

• RIPPLE: ↑ 2.9% or ↓ 2.0%

• LITECOIN: ↑ 2.8 % or ↓ 1.9%

All cryptos listed above are offered by FXTM as Crypto CFD’s.

Technical outlook…

Bitcoin is firmly bullish on the daily timeframe. Prices are trading above the 21, 50, 100 and 200-day SMA however the Relative Strength Index (RSI) has entered overbought territory.

• A solid daily close above $107,000 could push prices to fresh all-time highs at $110,000 and beyond.

• Should prices slip below $105,000, this may encourage a selloff toward the psychological $100.000 level.

• Bitcoin ↓ 2.6% in October

• HBO doc identifies Peter Todd as Bitcoin creator

• Over past year Fed minutes triggered moves of ↑ 2.2% & ↓ 1%
  

• Over past year US CPI triggered moves of ↑ 1.8% & ↓ 2.9%
  

• Technical levels: $63,500 & $61,000

Bitcoin has found itself trapped within a range on the daily charts.

The world’s largest cryptocurrency could be waiting for a fresh fundamental spark to trigger significant price swings.

Despite the growing anticipation, Bitcoin offered a muted response after HBO’s documentary pointed to Canadian Bitcoin developer Peter Todd as Satoshi Nakamoto. However, Todd immediately denied these claims on social media.

This was initially a big deal due to the mystery surrounding Satoshi Nakamoto who is estimated to hold 1.1 million Bitcoins worth $66 billion. If Satoshi’s identity was truly unmasked, it could have various implications for Bitcoin which has skyrocketed over the years and gained mainstream acceptance.

With our attention back to key data, here are 3 things to keep an eye on this week:

    1) Fed speeches + FOMC meeting minutes

Last Friday’s strong jobs report boosted confidence in the US economy and erased hopes around a 50bp Fed cut in November.

It will be interesting to see what Fed officials think about the latest developments and the potential impacts it could have on future rate cuts. Regarding the FOMC minutes, investors will be looking for fresh insight into the outlook for labour markets or future policy moves.

Given how cryptocurrencies have shown sensitivity to interest rates, the incoming event may spark price swings.

Golden nugget: Over the past year, the FOMC minutes have triggered upside moves of as much as 2.2% or declines of 1% in a 6-hour window post-release.

    2) US September CPI report

As highlighted in our week ahead report, the incoming inflation data may impact bets around how deep the Fed cuts rates in Q4.

Signs of cooling price pressures may boost expectations around lower interest rates, supporting Bitcoin as a result. The same is true vice versa.

Golden nugget: Over the past year, the US CPI report has triggered upside moves of as much as 1.8% or declines of 2.9% in a 6-hour window post-release.

• A hotter-than-expected CPI report could drag Bitcoin prices lower as the dollar strengthens and rate cut bets cool.

• A soft inflation report may support the argument around lower US interest rates, boosting Bitcoin prices

    3) Technical forces

Bitcoin remains trapped within a range on the daily charts with support around $61,000 and resistance at $63,500 where the 200-day SMA resides. 

• A solid breakout and daily close above $63,500 could encourage a move toward $65,000 $66,000.

• A break below the 100-day SMA at $61,000 could see prices test $60,000. Sustained weakness below here may encourage bears to attack $57,600.

• Bitcoin ↑ 6% since Fed cut last week

• Fundamental spark could trigger price swings

• Powell’s pre-recorded speech & US data in focus

• Tough resistance at 200-day SMA

• Technical levels – $68,250, $64,000 & $60,000

Bitcoin has struggled for direction since the Federal Reserve announced its 50-basis point rate cut last week.

Despite rising roughly 6% post-Fed decision, bulls failed to conquer the 200-day SMA at $64,000.

Note: Lower US interest rates may boost appetite for riskier assets such as cryptocurrencies.

Looking at the daily charts, prices seem to be trending higher but the Relative Strength Index (RSI) is near overbought territory – signalling a potential throwback.

Still, the world’s largest cryptocurrency could experience big price swings with the right fundamental drivers. This may come in the form of a pre-recorded speech by Powell and key US data including the jobless claims in addition to the personal consumption expenditure gauge.

The biggest takeaways from the Fed decision last week were:

• Dot plot projections showed two more 25 bp cuts expected.

• Future rate cuts would be data-dependent.

• Markets currently expect 75 bp of cuts by the end of 2024.

So, investors are likely to closely scrutinize Powell’s pre-recorded speech and US data for additional clues on the Fed’s next move in Q4.

Traders are currently pricing in a 60% probability of a 50 bp Fed cut by November with 75 bp worth of cuts priced in by the end of 2024.

Taking a deeper dive, the initial jobless claims is expected to rise 223k in the week ended September 21st. A figure that exceeds market forecasts could fuel fears over the health of the US labour market – supporting the argument for deeper rate cuts.

Golden nugget: Over the past 12 months, the initial jobless claims have triggered upside moves as much as 1.5% or declines of 2% in a 6-hour window post- release.

Note: It will be worth keeping an eye on the second quarter GDP data (final print) which is expected to confirm that the US economy expanded 3%.

On Friday, Fed speeches and the US August PCE report will be in focus. Ultimately, further signs of cooling price pressures may reinforce bets around the Fed cutting rates by 75 bp by the end of 2024.

Golden nugget: Over the past 12 months, the PCE report has triggered upside moves as much as 0.7% or declines of 2% in a 6-hour window post- release.

Looking at the technical picture…

Bitcoin is on breakout watch with prices lingering around the 200-day SMA.

• A solid breakout and daily close above $64,000 may open a path toward $68,250.

• Should $64,000 prove to be reliable resistance, this could trigger a selloff back towards the 100-day at $61,000 and $60,000 – where the 50-day SMA resides.

• Ethereum ETF’s exceed $100 million inflows on debut

• Collective trading volume of ETFs surpass $1 billion
  

• Cryptocurrency ↑ 50% since start of 2024

• Technical levels – 21 & 50 day SMA

Only a few months ago we discussed the possibility of Ethereum ETFs after Bitcoin paved the way.

Earlier this week, Ethereum ETFs finally went live – marking another watershed moment in the digital asset space. And its debut yesterday did not disappoint, bringing in over $100 million of inflows despite the massive $484 million outflows from Grayscale’s freshly converted Ethereum Trust.

Note: An ETF is a derivative that enables traders to benefit from changes in the underlying asset’s price without owning it.

Like we have seen with Bitcoin ETFs, this crucial development may lead to increased exposure to Ethereum – providing greater and easier access without owning it. In addition, the second crypto adoption could open the floodgates for more ETF adoptions, with fresh anticipation for a Solana ETF soon.

Despite the collective trading volume of the nine new spot ETFs surpassing over $1 billion, Ethereum offered a muted response. Prices are trading around 3466 as of writing, trapped within a range on the daily charts.

Still, Ethereum is up over 50% since the start of 2024 and may push higher if the new Ether ETFs attract fresh inflows from investors and institutions.

Since reaching all-time highs on March 12th, 2024, Ethereum seems to be morphing into a descending triangle.

After bouncing off the support of the descending triangle on July 8th, 2024, the cryptocurrency rallied for 8 consecutive days and has remained in a range for the past 9 days.

The last 6-days have seen Ethereum prices close above its 50-day moving average and the cryptocurrency bulls may look to the following near-term resistance levels.

• $3547.34: The resistance of the current range-bound channel

• $3686: An important price level

Ethereum bears on the other hand will have their sights on the following near-term support level.

• $3408.04; The 50-day simple moving average

• $3385.39; The support level of the current range-bound area

• $3262.77; The 21-day simple moving average