As someone who has been closely following and participating in the crypto market for several years now, I find myself intrigued by the latest developments in this dynamic space. The news about Microsoft considering adding Bitcoin to its balance sheet is particularly fascinating, given my personal experience with the tech giant as a long-time user of their products.
In simple terms, for the first time ever in a weekly closing, the value of Bitcoin (BTC) surpassed $100,000, marking a turbulent commencement to a fresh trading period.
- Weekly close records do not last long as analysis warns that the market should fill a $10,000 downside wick from last week.
- CPI week dawns, and the United States Federal Reserve is less than ten days from its next interest rate decision.
- China announces its first policy-loosening move in nearly fifteen years, starting in 2025.
- Microsoft is due to vote on creating a Bitcoin treasury in what could become a major week for corporate Bitcoin adoption.
- BTC price analysis sees “choppy” conditions characterizing the market for the short term, with the next stop-off point at $110,000.
BTC price dip: “Sooner rather than later?”
On December 8th, Bitcoin experienced a late spike, enabling it to establish a fresh weekly close surpassing $100,000 as a new record.
Initially reaching a significant six-figure milestone, the occasion was swiftly concluded as Bitcoin’s value against the US Dollar dropped below $99,000, marking a 2.8% decrease on that particular day, according to data from CryptoMoon Markets Pro and TradingView at the time of writing.
In his most recent market breakdown on X, the well-known trader Skew expressed that it’s yet to maintain a level exceeding $101K.
In simpler terms, Skew mentioned that some nearby elements were preventing the bulls from pushing prices further up towards finding their true value.
“He suggested that we should aim for increased power and high demand to push the market upwards, with the $98K region serving as a strong foundation. If there’s persistent weakness instead, it might be wise to hold back for a while.
As a researcher analyzing the cryptocurrency market, I’ve taken a cautious stance regarding Bitcoin’s price movement. According to my analysis, for Bitcoin to validate the massive daily candle wick of $92,000 that was formed during the liquidation surge on Dec. 5, it needs to retrace approximately half of that wick back to around that level.
CrypNuevo pointed out that there was a high likelihood of 96% that the wick (candlestick) would be filled up, referring to it as an “imbalance” which would temporarily halt the market’s progression.
In simpler terms, the user is asking if there’s a chance the price could rise (experience a breakout) beyond its current level without first dipping down to $94,000 (50% retracement level).
“Yes, it is. But I’d NOT trust that move because there is a major imbalance to the downside that needs to get filled sonner than later.”
CPI comes as markets see more Fed rate cuts
This week, the standout event on the U.S. economic calendar was the release of the Consumer Price Index (CPI) figures for November.
As the Federal Reserve’s interest rate decision approaches within a week, traders are increasingly favoring their bets towards continued monetary policy easing.
According to the most recent information from CME Group’s FedWatch Tool, there is an estimated likelihood of about 85% that the Federal Reserve will lower interest rates by 0.25% following their meeting on December 18th.
Officials grapple with a challenging predicament: escalating joblessness coupled with increasing prices, collectively termed “stagflation.
Everyone is eagerly awaiting the Consumer Price Index (CPI) and Producer Price Index (PPI) inflation figures since financial markets are optimistic about a potential 25 basis points reduction in interest rates if these numbers align. This summary was provided by trading resource The Kobeissi Letter, who also mentioned the forthcoming PPI release.
2024 is expected to see additional employment statistics alongside Producer Price Index (PPI) releases, as these figures have a particularly significant impact on crypto markets.
According to Kobeissi’s recent observations over the weekend, the typical length of unemployment in the United States reached 10.5 weeks in November, marking a three-year high. Furthermore, the average duration of unemployment increased to 23.7 weeks, a level not seen since April 2022.
“Both metrics have been now rising at the pace previously seen at the onset of the last 4 recessions.”
China embarks on rare fiscal easing
A classic macro boost for Bitcoin may yet come from China as soon as 2025.
Next year, China is planning to loosen its monetary policies, marking the first change in this direction since 2010. This action is significant for traders dealing with risk assets.
According to media reports, such as those from Reuters on December 9th, Beijing considers it necessary to keep their policy “adequately flexible” in the future.
The increased flow of funds (liquidity) that may occur might significantly affect the cryptocurrency market. Similar to how earlier this year, the Chinese economic stimulus boosted Bitcoin’s price trajectory swiftly.
Examining the current yield rates on ten-year bonds, Dan Tapiero, the head of 10T Holdings, expressed his belief that these yields are the “most significant under-the-radar global economic indicator” at present.
In simpler terms, the statement means that since negative interest rates in Switzerland have lessened concerns about inflation in the United States, the U.S. dollar has grown stronger, interest rates have decreased, and the NASDAQ index has risen, along with an increase in liquidity. This was shared in a recent post dedicated to X.
At HFI Research, the focus shifts towards bonds when considering potential advantages from any improvements in liquidity conditions.
Last week, it was stated to its X followers that China may soon discover they’re treading a comparable path to Japan.
“The more monetary stimulus it does, the more liquidity flows into bonds as opposed to risk assets. Why? Because people are skeptical that the fiscal stimulus will work.”
Microsoft to decide on Bitcoin strategy
In the next few days, you might see news about significant Bitcoin adoption by institutions, as tech behemoth Microsoft is set to make a decision on incorporating Bitcoin into their financial holdings.
After hearing a pitch from Michael Saylor, CEO of the business intelligence company MicroStrategy, the board at Microsoft is now pondering over the possibility of mirroring his decision to hold Bitcoin in their corporate reserves.
On December 1st, Saylor posted the slides from his talk, labeling Bitcoin as “the top-performing asset that offers an unconnected return for corporations to hold within their financial records.
“Microsoft should be powered by Digital Capital,” one stated.
There have been whispers that another major player in technology, Amazon, might be thinking about amassing Bitcoin holdings following a proposition made to their board by The National Center for Public Policy Research, an American research organization.
According to CryptoMoon’s recent report, the proposal critiques the Consumer Price Index (CPI) that is set to be released this week, labeling it as an “exceptionally inadequate gauge for inflation.
Could it be that Amazon is considering purchasing Bitcoin? That’s a question posed by Charles Edwards, founder of Capriole Investments – a firm specializing in quantitative Bitcoin and digital assets, following recent headlines.
Just last week, a study indicated that even if Bitcoin’s price dropped by as much as 80%, MicroStrategy might endure this decline without significant impact on its financial statements.
A choppy new year?
Even though Bitcoin has been reaching unprecedented record highs, it may encounter an extended phase of price stabilization and tougher barriers to overcome in the process.
Based on an analysis by CryptoQuant, short-term Bitcoin price fluctuations appear to be dominated by a pattern of frequent changes or volatility.
According to Percival’s analysis, the initial stage of the 14-day Market Volatility Indicator indicates potential adjustments as a part of the ongoing market stabilization period.
On a day-to-day basis, the Choppiness Index indicates that a significant price breakout from the current trading band in the Bitcoin/USD pair becomes progressively less probable.
15-week highs mean that the pair is now “choppier” than at any time since mid-August.
In the ongoing struggle against the market’s fluctuations, Percival highlighted two significant price levels: $110,000 and $120,000. These points are crucial for Bitcoin investors as they represent potential profitability thresholds.
He utilized the actual selling prices of short-term Bitcoin holders (STH), which refers to individuals who own a certain amount of BTC for no more than 155 days.
He elaborated that the psychological significance of reaching $120,000 could potentially lead to a prolonged period of consolidation, or a “more substantial holding area,” in the future.
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2024-12-09 13:44