As an analyst with over two decades of experience in the financial markets, I have witnessed numerous market cycles and learned to appreciate the resilience of Bitcoin. The recent dip below $100,000 was a stark reminder that even the most powerful bull markets can be halted by unexpected events, such as the Fed’s reluctance to pursue further interest rate cuts.
On December 19th, the opening of Wall Street saw Bitcoin (BTC) hovering around the $102,000 mark, as optimism in the crypto market tentatively rebounded from a fresh wave of macro-level concerns.
Fed halts Bitcoin bull market in its tracks
Data from CryptoMoon Markets Pro and TradingView showed 2% BTC price gains versus the daily open.
Yesterday, Bitcoin experienced a drop along with other cryptocurrencies and risk assets due to the US Federal Reserve’s actions. The BTC/USD pair reached its lowest point at $98,695 on Bitstamp.
The signal for potential reluctance regarding further interest rate decreases originated from Federal Reserve Chairman Jerome Powell, due to an uptick in several inflation indicators.
In his prepared remarks at the subsequent press conference, he announced that we have reduced our interest rate by a full percentage point from its highest level, thereby making our monetary policy much more accommodating and less restrictive.
“We can therefore be more cautious as we consider further adjustments to our policy rate.”
Both the S&P 500 and Nasdaq 100 ended the day’s trading session down by around 3% as a result.
According to the FedWatch Tool by CME Group, there’s only an 8.6% chance that the Federal Reserve will lower interest rates again during their meeting in January.
Examining short-term Bitcoin price fluctuations, well-known trader Skew continues to express a generally optimistic view on Bitcoin’s potential rebound.
In a recent post about the 4-hour chart, he stated that so far, there has been no contradiction to the current trend, despite the recent dip down to the previous week’s low and a decrease in market demand.
“Would like to see price remaining strong above VAH here & sustained passive demand under price for a recovery / higher.”
Skew referred to the value area high, or VAH, which made the area above $101,500 important to hold.
BTC price risks January pullback
It’s suggested to maintain a long-term perspective even during increased market turbulence, as Bitcoin has seen a 6% increase in December alone.
In Daan Crypto Trader’s recent post, he noted that the Bitcoin price movement appears erratic and less appealing, but it’s continuing to climb gradually.
Daan Crypto Trades recognized that the emotional release provided by widespread liquidations during market declines is a common occurrence. According to data from the tracking tool CoinGlass, the combined liquidation amount across all cryptocurrencies in the 24-hour period leading up to the current time was approximately $800 million.
He noted that in the year 2021, Wednesdays often tended to be the days with many Bitcoin liquidations, referring to the pattern of market activity during Bitcoin’s past bull run.
“It almost became a trend at some point. Up only -> Mid week liquidation wicks -> Retrace. Would be interesting to see if that repeats.”
Despite some optimistic views, others who are cautious about broader economic factors continue to express pessimistic forecasts. For instance, trader and analyst Mark Cullen has issued a warning about the possibility of a “significant decline” in the price of Bitcoin that might still occur.
The value of Bitcoin (BTC) remains around 100k for now, and this level is crucial for potentially witnessing one more rise before a significant downturn occurs. I’m anticipating this pattern to unfold in January, as a heads up to my followers.
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2024-12-19 17:06