As business enters the year-end slowdown, YouHodler executives say there is still plenty to watch in the markets.
Chief of Markets Ruslan Lienkha said we are observing a mild correction in major cryptocurrencies and a more pronounced decline among altcoins. It appears to be driven by a correction in equity indices, particularly in U.S. tech stocks, likely due to profit-taking ahead of the inflation data release and Nvidia’s difficulties with Chinese regulators.
“The market anticipates a slight uptick in inflation; however, if CPI reveals figures higher than expected, it could intensify the ongoing correction across financial markets,” Lienkha said. “In such a scenario, the timing and likelihood of Federal Reserve rate cuts will become a critical focus heading into the new year.”
Lienkha added that signals from the bond market indicate that future Fed rate cuts might proceed slower than current expectations suggest. This adds another layer of uncertainty to market dynamics in the near term.
Head of Risk Sergei Gorev sees many traders preferring to fix their positions in their investment portfolios to receive their annual bonus. Currently, we see the market entering the active sales phase of some long-term holders of cryptocurrencies.
“Those who have accumulated crypto assets on their balance sheets for a long time are beginning to fix profits partially,” Gorev observed. “They can be called ‘smart money.’ And there is another part of investors (let’s call them ‘dumb money’) who, having missed the main upward movement, try to ‘run to catch up with the train leaving into the distance’ and buy what has not yet grown. These are just altcoins that have been growing quite strongly over the past month. It is fashionable in the market to call it the ‘altseason’.
Gorev advises to look at it from the point of view of fundamental analysis. BTC has grown since the SNP500. And the SNP500 Dividend Yield is currently 1.2%. At the peak of the dot-com bubble, this figure was about 1.12%. In the big collapse of the markets in 2008, it was as much as 3.42%.
“The cost of PUT options on the SNP500 index is again at lows,” Gorev said. “Insurance against a falling market is again of no interest to anyone and is unnecessary. Everyone has opened positions in one direction – up – and believes the markets will grow forever.”
Gorev believes such moments are factors behind the beginning of stock hysteria when everyone has already bought shares and bitcoin. Markets often turn around when everyone has already bought an asset.
Therefore, what is now happening with the growth of altcoins is the local peak of prices for cryptocurrency assets. He predicts prices will be much higher in the future. However, locally, the cryptocurrency market is ready for a good correction along with the SnP500.
“I think the first stop target will be around $60,000 – $70,000 for 1 BTC,” Gorev predicted.
Lienkha concurred. He noted that although Bitcoin is trading relatively near its all-time high, the broader cryptocurrency market is experiencing a phase of consolidation among major coins, accompanied by heightened volatility in altcoins. He said this behavior is primarily influenced by uncertainty in equity markets, particularly in the U.S., where investors are taking profits ahead of the Federal Reserve’s meeting on Dec. 17-18.
“Despite recently released inflation figures showing a slight increase, the CPI aligned with market expectations,” Lienkha said. “This alignment has sustained optimism regarding a potential rate cut by the Federal Reserve in December, fuelling hopes for the continuation of the Christmas rally.
“It is reasonable to expect this upward momentum to persist until the Federal Reserve announces its policy.”