Weak USD Drives BTC

The sharp shift lower in USD on the back of the December FOMC yesterday has been welcomed by crypto traders. BTC rallied more than 6% on the day and is now up more than 7% off the week’s lows.  With US rate cuts now clearly on the horizon, risk assets are in fine form today with improvements across the board. Following the recent correction lower in BTC it seems that bulls are rejoining the market with the prospect of a fresh breakout now looming.

SEC Approval Still Looms

The broader backdrop for BTC remains focused on the upcoming SEC ETF decision due in January. Having delayed decisions on the current applications in November, crypto markets have continued to edge higher driven by a sense of optimism that the SEC will approve some/all of the applications. If this proves true in January, this aspect combined with US rate cut expectations should help drive BTC higher through Q1. However, if the SEC turns down the applications or finds a way to further delay its decision, this will likely fuel a near-term unwinding of BTC as traders reassess and wait for a clearer signal.

BlackRock Adjusts its ETF

One interesting development this week was the change announced by BlackRock to the mechanics of its ETF model. The change would essentially allow participation from major Wall Street banks, currently prohibited from holding Bitcoin, by allowing them to create new fund shares in cash rather than crypto. This potentially amplifies the level of demand BlackRock might see for its ETF, which should in turn drive BTC higher.

Technical Views

Bitcoin

BTC is currently sitting just below YTD high, above the broken bull channel highs and the 39860 resistance level, now support. While this level holds, the focus remains on further upside with a break of 45530 the next objective for bulls. To the downside, a break back under the channel highs will turn focus to 37030 next. 

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