Markus Thielen, the Head of Crypto Research and Strategy at Matrixport, has hinted at a potential pre-Christmas rally with Bitcoin leading the charge.
This anticipation comes amid a backdrop of macroeconomic shifts that could set the stage for a significant surge in crypto prices, which Thielen describes as the “Santa Claus squeeze.”
Thielen’s analysis is rooted in recent market movements where some altcoins began to outperform Bitcoin, suggesting a momentum build-up that could translate into substantial gains.
Macroeconomic Indicators Fueling Crypto Optimism
This concept of a “Santa Claus squeeze” in the crypto market, a term coined to describe the seasonal rally often seen in equity markets, is not new. Thielen, in his Deribit Insights report, noted that Bitcoin has historically seen an average rally of 23% during the festive months of November and December.
This trend, coupled with last week’s performance where alternative cryptocurrencies gained an edge over Bitcoin, lends credibility to the forecast of a year-end rally, according to the Head of Crypto Research and Strategy at Matrixport.
Notably, the potential for a “Santa Claus squeeze” is underpinned by several macroeconomic indicators that Thielen has identified. Thielen points to a trio of events that collectively signal an interest rate peak, setting a conducive stage for risk assets like cryptocurrencies.
The US Treasury’s pivot towards “slowing the pace of issuing longer-dated debt” is the first sign Thielen identified, implying expectations for a decline in interest rates, which historically benefit growth assets such as tech stocks and, by extension, digital currencies.
Adding to the mix is Federal Reserve Chair Jerome Powell’s “dovish” tone at the post-FOMC meeting press conference. His statements have been interpreted as a potential halt in rate hikes, with the possibility of cuts in 2024, bringing a dose of positiveness into the markets.
For context, during the conference, Fed Chair Jerome Powell discussed the balanced nature of inflation risks, referencing the term “symmetric” twice, which suggested a tone of accomplishment in the Federal Reserve’s efforts to reduce inflation. Additionally, Powell expressed his view that a recession is not on the horizon.
Furthermore, a less-than-stellar US nonfarm payroll reported last Friday suggests a “weakening labor market,” according to Thielen, reducing the chances of…
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