Is this December a good time to buy Bitcoin? Some in the crypto community say there is no gift like a price increase, especially during the holiday season at the end of the year. Historically, stocks and cryptocurrencies deliver most of their positive annual returns during this time.
– The Santa Claus rally is a continuous increase in the stock market that occurs around the Christmas holidays on December 25. Most estimate that these jumps happen in the week leading up to the Christmas holidays, while others see trends starting from Christmas to January 2 – it says on Investopedia.
But it is not just a seasonal jump in the cryptocurrency market this month. There are also broad macro trends in favor of the ‘orange coin’. Meanwhile, there are fundamentals in the supply of Bitcoin on crypto exchanges.
Moreover, the Trump effect for most stocks and cryptocurrencies after his historic electoral victory is very real. Given his agenda for the growth of the crypto industry, markets expect this to heavily favor Bitcoin as his administration progresses.
Here are five reasons why Bitcoin bulls expect further price increases for Bitcoin by December and New Year.
1. The Fed is expected to lower rates again in December
Cryptocurrencies like Bitcoin typically rise long-term during the Federal Reserve’s low-interest rate regime. With interest rates having been nearly 0 percent for years after the 2008 financial crisis, Bitcoin surged from zero to $20,000 by December 25, 2017. Then, when the Fed raised rates in 2018, Bitcoin’s price crashed into what the market called ‘crypto winter’.
After that, the Fed lowered rates back to zero in response to the global coronavirus pandemic in 2020. This led to new records for Bitcoin and many altcoins. Then the central bank returned to raising rates in early 2022.
Now that the Fed has returned to lowering rates, Bitcoin is in an upward trend. The price is rising above new highs in December and shows no signs of slowing down.
The Fed’s top official stated in early December that the Fed is ready to lower rates again at the meeting in December 17 and 18.
– I am currently inclined to support a reduction in the benchmark rate at our December meeting – said Christopher Waller, a key Fed official.
2. The Bitcoin supply cycle
The accommodating Fed’s interest rate regime is favorable for Bitcoin, but the supply cycle is also greatly in favor of the bulls. The Bitcoin white paper includes a 50 percent reduction in the issuance of new Bitcoins in circulation every four years, known as halving.
This is similar to the Fed raising its rates every four years, which would make every dollar stronger in purchasing power over time. Instead, the Fed lowers its rates to make every dollar weaker so that consumers and businesses spend faster and make up the difference with economic growth.
