January 1 REX Wire Market Outlook

Bitcoin is poised to make a big move soon.

January 1 REX Wire Market Outlook
Will risk assets continue to perform well in 2024?

It's Monday, January 1, 2024: The first day of the first week of the first month of a new year. As such, it's a great opportunity to take stock of where things stand as we head into what will likely be a critical year for major markets and economies. We'll start, as we generally do, with the macro outlook, before focusing in on the crypto markets.

TradFi Heats Up

The dollar has put in a three-month losing streak. Having topped out at 107.3 on October 3, it has since fallen to 101.4 at time of writing, dropping below 101 last week. It's now nearing the levels at which it stood six months ago, and the trend is firmly down, as the possibility of further interest rate rises recedes into the rear-view mirror.

The dollar is now sitting on a long-term resistance line. Dropping below 100 would open the way for renewed falls, and give risk assets a further tailwind.

Despite continual warnings from mainstream media and analysts about a coming recession, TradFi markets have continued their climb over the holiday period, with many trading at or above their all-time highs.

Bitcoin Consolidates, Waits

Bitcoin, meanwhile, has been sitting in a holding pattern for the past four weeks, mainly trading between $41,000 and $44,000. This might come as a surprise given that (presumed) ETF approval is just a week away.

Recent days, even over the Christmas holiday, have seen a flurry of updates to ETF applications, as the various providers race to meet the SEC's deadlines and ensure they comply with the agency's requirements. Cash creation and naming authorized providers (or "APs", the entities allowed to create and redeem ETF shares) have been particular issues for discussion and compromise. Now, however, all the ducks appear to be in a row, and there is no obvious reason for the SEC to deny the applicants.

Bitcoin closed last month and year with a green candle. On a shorter-term timeframe, its clearly consolidating ahead of a big move, so far putting in a series of higher lows but not yet making higher highs. BTC is currently trading around the crucial 50% level of $42,500.

BTC/USD, TradingView
Bitcoin has been consolidating for four weeks (TradingView)

We'll explore the possible short-term impacts of an ETF in a forthcoming blog. For now, though, we can say it won't be long before BTC's price action resolves one way or another—and it promises to be a very interesting year indeed for crypto.


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