The crypto market is currently undergoing a significant correction, down about 13% from last week's peak.

Although there are several economic reports expected to be released this week, they are unlikely to directly impact the crypto market in the context of the holiday season.

The Kobeissi Letter account states:

"We forecast that the volatility of the market from last week will continue into the early part of this week."

Economic events from December 23 to 27

Much of the market's decline last week was a reaction to the announcement from the Federal Reserve's meeting on Wednesday, where the central bank decided to cut interest rates by 0.25%.

However, the Fed's "dot plot" shows that policymakers expect only two interest rate cuts next year, instead of four as previously forecasted in September.

Additionally, Fed Chairman Jerome Powell also indicated that core inflation could be higher in 2025 than previously forecasted, while emphasizing that the central bank will continue to be cautious in further rate cuts.

On Monday, the December Consumer Confidence Index report will be released, reflecting consumer confidence in the economic situation, thereby directly affecting spending, which contributes about 70% to GDP.

The November Durable Goods Orders report, expected to be released on Tuesday, will provide data on the costs of orders received by manufacturers for durable goods, such as vehicles and electrical equipment. This information helps assess the state of U.S. manufacturing activity and reflects consumer demand for high-value products, influencing overall economic sentiment.

Initial data on unemployment claims will be released on Thursday, following the holiday on Wednesday. Also, on December 26, the Federal Reserve Bank of Atlanta will release GDP data.

Crypto market outlook

The crypto market continued to decline sharply over the past weekend, with total capitalization dropping to $3.4 trillion on Monday morning, while about $200 billion was withdrawn on Saturday and Sunday.

This correction has wiped out all gains from the past month, bringing the market back to its capitalization level at the end of November.

The price of Bitcoin continues to decline with a daily loss of 2% and is trading at $95,100. From the all-time high of $108,000 on December 17, Bitcoin has now dropped 12.3% and is approaching the support level around $90,000.

Meanwhile, Ethereum recorded a sharper decline, losing up to 20% from its peak of over $4,000 last week, down to about $3,300 at the time of writing.

The Kobeissi Letter has noted another liquidity hurdle for Bitcoin specifically, stating:

"Previously, the price of Bitcoin followed the global money supply with a lag of about 10 weeks. When the global money supply reached a new record level of $108.5 trillion in October, the price of Bitcoin hit an all-time high of $108,000. However, in the past 2 months, the money supply has decreased by $4.1 trillion, down to $104.4 trillion, the lowest level since August."

Kobeissi warns that BTC/USD could go through a "pause" phase in the bull market and could even witness the next stronger correction.

"If this relationship continues, it suggests that the price of Bitcoin could drop to $20,000 in the coming weeks."

BTC/USD compared to global M2 money supply | Source: The Kobeissi Letter/X



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