Bitcoin weekly: Santa rally?

Stocks look set for a rally into the end of the year, spurred by a US rate cut on Wednesday. This could give room for the bounce in crypto to continue. However, given the recent breakdown, expect the bounce to eventually turn into a bull trap.

Also watch the accompanying chart analysis on YouTube.

US stock markets closed another week up on Friday, on the back of somewhat weak job numbers, combined with core PCE inflation coming in no higher than expected. This gives hope for a rate cut at the FOMC meeting this Wednesday. As of Monday morning, the market has it at 87% chance of a 25 bps cut, so that’s likely what’s going to happen.

A rate cut would set the stage for a continued stock market rally into the end of the year, no matter how loud AI critics scream “bubble”. Make no mistake, at some point the AI bubble will pop, but it could keep expanding for much longer than most expect.

Bitcoin ended the week flat, recovering from the dump early last week. If tradfi markets do get a strong end of the year, this could give room for the bounce to continue. This doesn’t change the fact that bitcoin broke down last month, however, so any bounce should now be seen as a likely bull trap.

If the bounce does continue, look for $100k and $109k as the two main resistance levels. To the downside, $72k-76k is a strong support area.

Bitcoin dominance again ended the week flat. Altseason remains on pause.