According to DLNews, the anticipated Bitcoin supercycle may be postponed until next year, as analysts suggest. Following a 36% surge after the US election, Bitcoin's momentum has slowed, with attention shifting from political events to monetary policy. Federal Reserve Chair Jerome Powell has expressed concerns about inflation and indicated a more gradual approach to interest rate cuts. This suggests that Bitcoin might not see another significant boost until the new year, and investors should prepare for potential volatility.
Cory Klippsten, CEO of Swan Bitcoin, commented on the situation, stating that Bitcoin is in the early stages of a potential massive bull run. He warned of possible pullbacks ranging from 20% to 40% but advised against attempting to time the market peak. Powell, during the latest Federal Reserve meeting, acknowledged that while inflation has decreased from its peak, it remains a concern. Recent consumer pricing data showed a 0.2% year-over-year increase, marking the first rise in seven months, indicating persistent inflation. Additionally, strong US employment figures highlight a resilient economy, leading Powell to conclude that there is no immediate need to lower rates.
The capital markets, including cryptocurrencies, reacted swiftly to Powell's hawkish remarks, which marked a shift in tone since the central bank initiated a new rate-cutting cycle in September. Following Powell's speech, the S&P 500 dropped by 1%, the NASDAQ fell by 2%, and Bitcoin experienced a 2% decline. Greg Magadini, director of derivatives at Amberdata, noted that the Federal Reserve's cautious stance on rate cuts at its December meeting turned positive news into negative market reactions.
The uncertainty surrounding recent political appointments, such as Matt Gaetz for attorney general, has added to market confusion, according to Steven Lubka, head of Swan Bitcoin's institutional investment arm. Despite this, sentiment in both stock and crypto markets remains optimistic, particularly for cryptocurrencies. Carlos Guzman, an analyst at GSR, highlighted the shift from a previously hostile administration to a more crypto-friendly one under the President-elect. The choice for Treasury Secretary, potentially Kevin Warsh, is also influencing crypto investor sentiment.
Guzman is monitoring the possibility of Trump fulfilling his campaign promise to establish a Bitcoin reserve for the country. Although the likelihood is considered low, it is not entirely dismissed, especially with Senator Lummis' support. If realized, this could significantly impact Bitcoin prices and potentially benefit alternative cryptocurrencies as well.
