Stock Market Bounces Ahead of Holiday Weekend, With Bitcoin Losing More Ground
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Stock Market Bounces Ahead of Holiday Weekend, With Bitcoin Losing More Ground

Investors brace for a season of good cheer as financial markets rally ahead of Christmas festivities.
Neither the author, Kingsley Alo, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.

Financial markets witnessed a slight bounce to the upside this week ahead of 2021’s Christmas weekend. This comes after fear in the markets that followed the negative headlines about the omicron variant and the Federal Reserve’s tightening measures this month. With the “Santa rally” still to come, analysts are anticipating more volatility to enable them to buy dips in prices. This would allow them to reap the rewards of the usual end-of-year rally in prices. 

A Santa rally is a persistent surge in the stock market that happens in the last week of December. It usually lasts until the first two trading days of January.

Crypto Market Continues Downward Spiral

For Bitcoin, the bulls have continued to defend the 200-day simple moving average (SMA) of $47,130. However, they have been unable to push the price above the 20-day exponential moving average (EMA) of $49,622. This demonstrates a lack of demand at the upper levels. 

BTC/USDT daily chart. Source: TradingView

It is still yet to be seen how Bitcoin and the entire crypto market will react to the Santa rally at the end of the year. Observers and traders alike will be keenly observant and ready with their stablecoin supply to buy up further dips.

The cryptocurrency market continued its struggle to make gains this week ahead of Christmas. The entire market has been in a downtrend since Bitcoin hit an all-time high of almost $70,000 in November. The effects of the Covid Omicron variant are being felt strongly as more investors are taking a risk-averse position. 

Even after the dramatic decrease in Bitcoin’s price, institutional investor interest remains lukewarm. Statistics show that the largest institutional Bitcoin instrument, the Grayscale Bitcoin Trust (GBTC), is selling at a discount of more than 20%. Retail traders are not left out as they continue to liquidate their positions and lock gains ahead of the festivities.

According to Santiment, an on-chain data source, the quantity of USDT stablecoins on exchanges has reached a 6-month high. It noted that the ratio of tether stablecoins had risen to 22.5%, roughly $8.99 billion, pointing to increased buying power.

Source: Santiment

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Stock Markets Rally Following Three Day Slide

The major stock averages rallied substantially on Tuesday after three days of losses due to concerns over the Covid Omicron strain. The Dow Jones Industrial Average rose 560.54 points (1.6%) to 35,492.70, led by Nike and Boeing. The S&P 500 rose roughly 1.8% to 4,649.23, with gains in nine of the 11 sectors. The Nasdaq Composite Index, which focuses on technology firms, rose 2.4% to 15,341.09. Finally, the Russell 2000 small-cap index rose 2.9% to record its most substantial increase since July 20.

The quick spread of the coronavirus variant has rocked financial markets globally, causing massive sell-offs this month. Many are concerned about the influence of the strain on the global economic recovery. This has led to investors taking a more defensive approach, with consumer staples, real estate, and utility stocks among the top gainers.

Closer analysis reveals that Nike and Micron technologies led the bounce recorded. The favorable update from these corporations is helping to alleviate concerns about more significant supply chain bottlenecks in a high inflation environment. This has become a source of problems for central banks worldwide. Nike, which recently bolstered its metaverse presence, increased by 6.6% as it outperformed its quarterly profit and revenue projections. On the other hand, Micron Technology stocks went up 9.5%, with the chipmakers forecasting positive second-quarter profits.

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Do you expect a Santa rally in the financial markets at the end of the year? Let us know in the comments below.

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