The rollercoaster ride of Bitcoin and other cryptocurrencies hit a bump on Tuesday, as digital assets experienced a challenging selloff. Despite this setback, prices continue to hover at their highest levels since April 2022, thanks to a recent rally.
Bitcoin’s Price Dip and Current Standing
Over the past 24 hours, the price of Bitcoin witnessed a drop of less than 1%, settling at $41,850. This decline temporarily pushed the price below $41,000, marking the most significant daily selloff for the token since early March. While Bitcoin has stepped back from its recent peak above $44,000, it remains up by over 50% in just two months. This positive trajectory has led to discussions about a potential new bull market within the crypto sphere.
Short-Term Gauges Point to a Positive Outlook
Despite the recent pullback, industry insiders like Katie Stockton, the managing partner at Fairlead Strategies, believe that Bitcoin’s short-term trend is still on an upward trajectory. According to Stockton, key indicators for trend following suggest that Bitcoin will continue heading higher.
Regulatory Expectations and Macroeconomic Factors
Fueling the surge in Bitcoin prices over the past few months is the anticipation that regulators in the United States will soon approve the first spot Bitcoin exchange-traded fund (ETF). This development is expected to generate fresh interest from investors and provide a significant boost to the market.
Adding to the cryptocurrency market’s optimism is the positive macroeconomic landscape. Recent indications of decreasing inflation and slowing economic growth have raised expectations that the Federal Reserve will implement multiple interest rate cuts in the coming year. Since 2022, higher interest rates have weighed down on tokens and other risk-sensitive assets like stocks. Therefore, the hope for reduced borrowing costs acts as a crucial tailwind for both asset classes.
In conclusion, while the recent selloff may have caused minor tremors in the crypto market, Bitcoin and other cryptocurrencies remain on a path of growth and recovery. With the potential approval of a Bitcoin ETF and supportive macroeconomic factors, the future looks promising for digital assets.
Inflation Data Could Impact Cryptos, Alongside Stock Market
On Tuesday, the spotlight falls on the release of the U.S. Consumer Price Index (CPI) for November, which has the potential to influence cryptocurrencies in a similar manner to the Dow Jones Industrial Average and S&P 500 in the stock market. This inflation data comes just ahead of the Federal Reserve’s upcoming monetary policy decision, scheduled for Wednesday. Analysts believe that the inflation reading could alter expectations for the first interest rate cut next year, which is currently being priced-in for March.
From a technical perspective, market analysts perceive the recent downward movement in Bitcoin, attributed to profit-taking, as having minimal impact on the overall bullish narrative. The momentum behind crypto prices remains intact.
According to Stockton, a breakout for Bitcoin would be confirmed if it manages to close above the $42,200 resistance level by this Sunday. Should this occur, the next level of resistance would be around $48,600. Stockton also notes that intermediate-term momentum continues to strongly favor positive conditions, implying that overbought conditions can be sustained without a major pullback in the coming weeks. The initial support for Bitcoin is anticipated at the rising 50-day moving average of approximately $37,400.
Moving beyond Bitcoin, Ether, the second-largest cryptocurrency, experienced a minor decline of less than 1%, settling at $2,230. Altcoins and smaller tokens displayed more resilience, with Cardano experiencing a 6% climb and Polygon registering a 2% increase. However, meme coins, such as Dogecoin and Shiba Inu, were relatively subdued, with Dogecoin experiencing a drop of less than 1% and Shiba Inu trading at a relatively stable level.