The cryptocurrency markets have experienced a significant recovery, marking a 5% increase in market capitalization to $1.68 trillion. This surge aligns with the Federal Reserve's latest monetary policy outlook. During the Federal Open Market Committee meeting on December 13, the Fed maintained the current interest rate at 5.5%. However, the central bank indicated a possibility of three rate cuts in 2024, driven by a decline in inflation and optimistic economic projections. This news has positively influenced both crypto and U.S. stock markets.
Fed Chair Jerome Powell noted the easing of inflation without a substantial rise in unemployment, signaling a potential peak in the current rate cycle. David Russell, Global Head of Market Strategy at TradeStation, highlighted a significant change in the Fed's language, suggesting a reduced need for aggressive tightening. Inflation, which peaked at 9.1% in June 2022, fell to 3.1% in November, with expectations to drop further to 2.4% next year and 2.1% in 2025. The Fed also forecasts a GDP growth of 1.4% and an unemployment rate of 4.1% for the next year.
In response to these developments, investors are gearing up for the "Santa Claus Rally," as commented by Gina Bolvin, President of Bolvin Wealth Management Group. The crypto market's recovery from the recent leverage flushout has been noteworthy, with Bitcoin nearing $43,000, following a 4.9% gain, and Ethereum reaching $2,272 with a 5.1% increase. Altcoins like Solana, Cardano, Avalanche, and Polkadot also recorded double-digit gains, adding to the market's overall buoyancy.
Disclaimer: Please note that the information provided in this article is based on the referenced research articles. It is essential to conduct further research and analysis before making any investment decisions. The cryptocurrency market is highly volatile, and investors should exercise caution and consult with financial professionals before engaging in cryptocurrency trading or investment activities.
