In soccer terms, the market sent the ball and the bears to separate corners. The Nasdaq 100 has been hovering above its July peak for several days. Likewise, S&P also approached its July peak. Optimism in stock markets stems from the idea that the FED has ended with interest rate increases. Indeed, the FED will not increase interest rates at the December meeting. The probability of an interest rate increase at the January meeting is extremely low. For the interest rate increase scenario in January to be accurate, November and December inflation in the USA must be above 3.2%. The Truflation website measures inflation rates daily and shows that inflation has stabilized at around 3%.
Bitcoin
Bitcoin has been rising for the last six weeks. We've always seen this streak at the beginning of bull seasons. The weekly Bitcoin chart shows increases in the upper column for six weeks in February 2013, April 2017, and March 2020. In the following period, the increase continues for a few more weeks. According to the bull season's character, there are consolidation periods, and a new series of increases is formed.
Bitcoin had difficulty passing the 37k-37.5k range. As of today, we are above this level. The most important resistance for Bitcoin is 40k, which creates a psychological limit. This area may be challenging to pass. On the other hand, the size of possible drawbacks will be limited.
Ethereum
The rise in the first days of November brought the Ethereum price above 2000 dollars. Ethereum still needs to pass the 2000-2100 dollar range. Yesterday, the price rose above $2100 twice but faced selling at this level. We can consider the resistance in Ethereum together with Bitcoin's psychological limit of 40k.
Since the beginning of the year, Bitcoin is up 127%, and Ethereum is up 73%. Bitcoin is 45% behind its all-time high (ATH), while Ethereum is 58% behind its ATH. That means Ethereum has more significant upside potential than Bitcoin. 2023 was the year of Bitcoin. I believe 2024 will be the year of Ethereum because investors started buying from the most reliable cryptocurrency. They can be expected to continue with the second biggest.
Some altcoins will provide more returns than Ethereum in the coming period. On the other hand, finding the right coin takes work. In this transition period, when the bear market ends, the coin with the highest risk-adjusted return is Ethereum.
Altcoins
My previous article stated that DEFI is the most popular category in the altcoin market. The DEFI concept came of age during the bear market. Along with DEFI coins, Layer 1 blockchains also encountered high investor interest last month. If the price stays strong in the crypto market, we can see altcoins with attractive stories rise one by one. The Hive ecosystem will also receive its share of investor attention in due course as developments continue uninterrupted throughout the bear market.
TL;DR
After a long winter in the crypto market, we started to see the first signs of spring. It would be a big surprise if the FED raised interest rates further; the first interest rate cut is expected to occur mid-year. The recession that permanent bears have been repeating for two years has not started. Economic activity in Europe is expected to remain weak in 2024. In the USA, there are still no apparent signs of recession. That means the soft landing scenario preferred by the FED may come true in 2024.
Most importantly, the FED's road map is more specific than ever in the past two years. In periods when uncertainty decreases, investors show more interest in investment instruments that are perceived as risky.
On the other hand, the price rises of this year reminded me again of the long-term crypto trends. The total market value of cryptocurrencies is doubling every year.
The above logarithmic scale chart is from Coingecko. I added the trend line to the chart, indicating that the total market value doubles yearly. The chart shows that the expected total value of the crypto market is approximately $3 trillion. We are still at half of this value. We have a long road ahead of us. I am optimistic about the future of the crypto market. On the other hand, I constantly remind myself to be cautious. I have never considered making leveraged or credit-based purchases.
I am considering investing in Ethereum, Hive, and Leo in the coming weeks because the general climate in the market is suitable.
Thank you for reading.
Image Source: Midjourney App