The Holiday Calm
The next two weeks will be quiet on the economic front as markets wind down for the holidays, keeping a stable path. This week brings only two notable events: October’s PCE report and the Q3 GDP report on Tuesday. Neither should shake markets significantly.
Expect minimal activity through the rest of the week. US markets close early Wednesday at 1pm ET and remain shuttered Thursday for the holiday. Trading will likely be slow and choppy over the coming weeks, complicated by year-end liquidity shifts and portfolio rebalancing.
Still, the outlook tilts toward continued recovery in risk assets.
Seasonal Patterns Point Up
Historical data shows the year’s final week has delivered strong positive returns on average over the past 75 years. While seasonal patterns shouldn’t be taken as gospel, the evidence is compelling: the end-of-year selloff appears to have already happened.
Bitcoin tried breaking below $85,000 and failed to hold. That failed breakdown suggests the market is ready to test above $90,000 next.
The Bigger Picture: Bulls Back in Control
Looking ahead to Q1 2025, the case for a larger recovery strengthens across multiple fronts.
Traditional Markets Clear the Deck
Major concerns that weighed on traditional finance have been largely resolved or priced in:
- Liquidity stress in repo markets
- Hawkish central bank meetings from both the Federal Reserve and Bank of Japan
- The unwinding of the AI trade
Recent economic data has been constructive. Liquidity conditions are finally improving after months of stagnation, with the dollar pulling back. Global liquidity measures are making new highs again after bottoming last month, a positive signal that historically aligns with Bitcoin rallies.
Peak Bitcoin Fear Has Passed
The worst of crypto-specific concerns also appears behind us, at least for now:
- Year-end tax loss selling
- Quantum computing threats to cryptography
- MicroStrategy liquidation worries
None of these issues seem likely to intensify further without some relief first.
Extreme Drawdowns Signal Opportunity
Bitcoin remains at historically severe drawdown levels compared to both stocks and gold, based on data going back to the previous cycle. The charts reveal Bitcoin’s current weakness relative to the Nasdaq 100 and gold during major corrections.
Even if we were entering a prolonged bear market similar to 2022, we’re likely closer to a local relief bounce in relative terms from where we stand now.
History Suggests Patience, and Opportunity
Past market behavior offers a useful roadmap. Following drawdowns of 30% or more, bottoming periods have averaged two months. Patience remains essential, but Bitcoin currently presents the most asymmetric risk-reward among major asset classes for playing a recovery into Q1.
The technical damage is real. The fear has been palpable. But the confluence of improving liquidity, resolved macro concerns, and extreme relative weakness suggests the setup for a rebound is forming.
The worst, it seems, may already be behind us.
This article is for information only and should not be taken as financial or investment advice. Crypto markets are volatile and risky. Always do your own research and consider your personal situation before making any decision.
If you want to go deeper into these topics, you can read more analysis on blog.millionero.com.
When you are ready and understand the risks, you can trade spot and futures on Millionero in a responsible way.