The Latest Market Overview from Matrixport
In the financial services firm Matrixport’s “Market Overview” (#2023-62), the Head of Research, Markus Thielen, emphasizes the critical role of understanding macroeconomic environments and liquidity considerations in tandem with crypto market structures and fundamentals to accurately predict the market’s trajectory. Thielen highlights that cryptocurrencies generally show robust performance when liquidity expectations improve, and cites the downturn in 2022 and the positive performance in 2023 as examples.
The Impact of Fed Statements on Crypto
In his analysis, Thielen discusses the recent dovish statement by Jerome Powell, Chairman of the US Federal Reserve, who mentioned potential interest rate cuts in 2024. He draws a comparison to 2019, when the Fed halted its interest rate hikes, leading to a nearly 300% increase in Bitcoin prices. Thielen points out that this would still not bridge the inflation-interest rate gap adequately if the Fed projects three rate cuts in 2024.
Forecasting the Crypto Market in 2024
Thielen extends his forecast to suggest that the US CPI could fall below 2% by the end of 2024, based on Matrixport’s inflation model. He says this decline in inflation should lead to a significant rally in risk assets, including stocks and cryptocurrencies.
Market Optimism Amid Challenges
Despite the possibility of the U.S. SEC disapproving spot Bitcoin ETFs in January 2024, Thielen remains optimistic about higher crypto prices in the coming year. He advises monitoring the Bitcoin dominance chart closely, as a declining indicator could herald an imminent altcoin rally.
Economic Considerations for 2024
Thielen discusses the significant amount of assets in US money market funds and explores the potential impact of the US election year in 2024 on stock prices and cryptocurrencies.
The Significance of Bitcoin Halving
Despite the challenges, Thielen notes the significance of Bitcoin halving, which is expected in April 2024. Historically, this event has been a catalyst for substantial price increases, as the reduced supply of new bitcoins often leads to increased demand among investors and traders.
Hot Take: The Future of Crypto in 2024
Thielen’s analysis presents a comprehensive outlook on the crypto market in 2024, highlighting key factors such as macroeconomic environments, liquidity considerations, and significant events like the US election and Bitcoin halving. Despite potential challenges, such as a possible disapproval of Bitcoin Spot ETFs, Thielen remains optimistic about the future of crypto, emphasizing the potential for higher prices and significant market rallies.
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