Top Local on Bitcoin and the Traditional Market in Recovery? Towards a Happy End in 2023?

The early Christmas present has been announced by the FED, it will now take a few months to implement, but it could accentuate market cycles, especially the cryptocurrency one!

Warning This article does not constitute investment advice or an invitation to invest. It is for information purposes only. You are solely responsible for your trading and investment decisions.

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DXY, a risk indicator

Last week saw the return of magic money! Indeed, the FED announced that rates were to be lowered because of the recession and all that! Great news for the markets, why?

DXY 2023 12 18 10 53 50 - Coinpri
Global view of the dollar, DXY.

The first thing to understand is the principle of scarcity. Central banks (FED in the US, ECB in Europe) control money creation. However, our system is designed to have a more or less continuous printing of our money. And inevitably, when something is continuously created, it loses value. The result is inflation.

Now, the dollar’s cyclicality seems quite logical: up, stagnant, down, up and so on. The FED, which is indicating that magic money will soon return, is announcing a fall in the dollar! The cycle of stagnation seems to be coming to an end, and a fall is therefore to be expected.

What does the fall in the DXY mean for the markets?

It’s the global risk indicator for large portfolios! Indeed, when the FED resumes money printing, large PFs will avoid keeping their money in traditional currencies, which will devalue. So, they’re going to turn to all high-risk investments. They’ll start with the blue chips – SPX, CAC40, etc. – and work their way up. Then, they will probably spread their money over increasingly risky assets, including crypto-currencies.

SPX and CAC40 already close to a new ATH

SPX 2023 12 18 14 17 20 - Coinpri
CAC40 chart, left. SP500 chart on the right. Both in weekly scale.

The CAC40 and SPX had already been rising for some time, so those who had been following the traditional markets were in for a treat this year, and it looks like it’s not over yet! Indeed, the FED’s announcement at the end of the week imposed a quality green candle, giving further impetus and clearly indicating the direction to follow for the coming weeks/months.

It’s only natural to see them accelerate first! They are the safest of the non-guaranteed assets! As such, they are the first to benefit from this decision.

And what about cryptocurrencies?

Alas, Bitcoin is nearing its peak for this part of the cycle… Indeed, the numerous leveraged open positions (record high on Bitcoin and equivalent to the 2021 ATH for altcoins) mean that a purge is necessary. What’s more, the Americans are recovering profits, enabling them to pay their taxes due in December.

BTCUSDT.P 2023 12 18 14 57 11 - Coinpri
Weekly chart of Bitcoin (BTC / USDT)

A retracement is bound to happen to prevent too many people from making money (logic, capitalism), but will it happen before ETFs are accepted? That’s the right question. In any case, we need to mark our supports in order to find the next buying levels that might interest us. But let’s not forget, we’re out of the bearmarket, that’s for sure. But we’re still far from a bullrun. We’ve simply experienced a bullish phase in the markets!

Conclusion

The end of 2023 is still up and down, even if the news is good. This could mean a return to a bullish phase for the traditional markets over the next few months. On the other hand, the crypto market is approaching or already on a local top. It’s important to take a step back, and not to FOMO all the news that’s going to be circulating over the next few days/weeks.

The year 2023 is over for me, let’s meet again in 2024. It’s been a real pleasure to write every week all year, and I’ll continue next year! In the meantime, I wish you all a very happy holiday season and lots of fun! See you next year!