1. Nansen Alph has indicated factors that could spur the crypto rally.
  2. The Bank of Canada meets and is likely to hike by 25bps to 4.50%.
  3. The Canadian economy is slowing down more quickly than expected.

A worldwide network of crypto mavericks called Nansen Alph had identified some developments that may prolong the cryptocurrency market’s current “feel good” phase. The US stock risk premium was reduced from 10% in October 2022 to the 75th percentile at 5.7%.

As a result of the premium’s shrinkage, investors may now be able to obtain more returns, which might enhance purchasing pressure on US equities and, therefore, on crypto assets. The Smart Money stablecoin indicator, which jumped into panic mode in May (25% as of January 22, 2023), is slowly returning to normal.

The upward shift in the premium may inspire investors to invest more money in the US stock and cryptocurrency markets, which might lead to an even stronger market boom.

According to a Reuters survey of economists, with risks tilted toward a higher peak, the Bank of Canada (BoC) will raise its benchmark interest rate by a small quarter point to 4.50% on January 25 and then halt an aggressive tightening campaign.

Given that the Canadian economy is slowing down more quickly than expected, the central bank will likely focus on monitoring changes in the economy and inflation while advocating for a gentle landing. As investors seek to profit from a more stable rate environment, a break in the rate-hike cycle might provide markets an additional lift.

Investors are becoming less pessimistic due to the market’s continued assessment of the recent rise as a bear market trend.

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