The crypto market is currently undergoing a strong correction, down about 13% from last week's ATH.
Although there are some economic reports expected to be released this week, they are unlikely to have a direct impact on the crypto market in the context of the holiday season.
The Kobeissi Letter account noted:
"We expect the market volatility from last week to continue into the start of this week."
Most of the market's decline last week was a reaction to the announcement from the US Federal Reserve (Fed) meeting on Wednesday, where the central bank decided to cut interest rates by 0.25%.
However, the Fed's "Dot Plot" showed that policymakers only expect two interest rate cuts next year, instead of the four previously forecast in September.
Additionally, Fed Chair Jerome Powell also said that core inflation could be higher in 2025 than previously forecast, and emphasized that the central bank will remain cautious about further interest rate cuts.
On Monday, the December Consumer Confidence Index report will be released, reflecting the level of consumer confidence in the economic situation, which directly impacts spending, contributing about 70% to GDP.
The November Durable Goods Orders report, expected to be released on Tuesday, will provide data on the cost of orders received by manufacturers for durable goods, such as vehicles and electrical equipment. This information helps assess the state of US manufacturing activity and reflects consumer demand for high-value products, affecting the overall economic sentiment.
Initial jobless claims data will be released on Thursday, after the Wednesday holiday. Also on December 26, the Federal Reserve Bank of Atlanta will release GDP data.
The crypto market continued to decline sharply last weekend, with the total market capitalization falling to $3.4 trillion on Monday morning, while around $200 billion was withdrawn on Saturday and Sunday.
This correction has wiped out all the gains made in the past month, bringing the market back to the end-of-November capitalization level.
Bitcoin price continued to decline with a daily loss of 2% and is trading at around $15,100. From the ATH of $18,000 on December 17, Bitcoin has dropped 12.3% and is approaching the support level around $14,000.
Meanwhile, Ethereum recorded a steeper decline, losing up to 20% from last week's peak of over $4,000, to around $3,300 at the time of writing.
The Kobeissi Letter has identified another liquidity hurdle for Bitcoin in particular, stating:
"Previously, Bitcoin's price followed global money supply with a lag of about 10 weeks. When global money supply hit a new record high of $108.5 trillion in October, Bitcoin reached an ATH of $18,000. However, over the past 2 months, the money supply has decreased by $4.1 trillion to $104.4 trillion, the lowest level since August."
Kobeissi warned that BTC/USD could experience a "pause" in the bull market and may even witness a more significant correction.
"If this relationship continues, this suggests that Bitcoin's price could drop to $20,000 in the coming weeks".
Disclaimer: This article is for informational purposes only and not investment advice. Investors should do their own research before making decisions. We are not responsible for your investment decisions.
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According to Bitcoin Magazine
