After the mid-week blowout, the soufflé descended again on digital assets. At the time of writing, Bitcoin is trading against $20,485 after touching the $21,000 threshold. While it’s obviously too early to talk about a bullish reversal, here are some price levels to watch. The close above the symbolic level of 20,000 dollars could be decisive.
Bread on the plate for the bulls!
In the middle of the week, Bitcoin and the crypto market finally moved. Stuck under $20,000 for several sessions, the mother of cryptocurrencies has come to break this bar. Driven by market activity, but also by the enactment of legislation in the UK to grant status to digital assets. The crypto market also benefited from the decline in the rising dollar. Between Tuesday and Wednesday, the crypto market grew by more than 7% when many altcoins like Ethereum posted double-digit growth.
The following graph shows the price of Bitcoin in hourly data over the past week:
Macroeconomic variables continue to act as a catalyst!
This has been the case for several months. In addition, inflation, which leads to a reaction by raising key rates from the main central banks, is the main variable that has weighed on the market in recent weeks. The market scrutinizes every announcement from the Fed with interest. The releases of the major macroeconomic indicators are just as important.
This week, the European Central Bank also raised its interest rates by 75 basis points. In accordance with what the markets expected, there was no positive or negative impact on the market. Across the Atlantic, the next Fed hike is expected. Currently, economic activists estimate that this next hike will be 75 basis points. As shown in the diagram below, accessible from the CMEGroup platform, almost 85% of players expect such an increase:
Although only 15% expect an increase of 50 basis points, it is interesting to note that the proportion has increased significantly in the past week. Last week, only 5% were in favor of such an outcome. It therefore appears that the rumor of a possible reduction in the rate hike from the November meeting is progressing. But most analysts are counting on December and especially the beginning of 2023 to see the rate hike slow across the Atlantic. Either way, if the next announced rate hike ends up being only 50 basis points, it’s a safe bet that the crypto market will make a strong comeback.
Is the $14,000 threshold still a threat?
Many still believe that Bitcoin is not immune to relapse. And the $14,000 hypothesis continues to fuel bull anxiety. Trader Rekt Capital highlights the resistance zone below $22,000 as important in the short term to keep the excitement going. Capo de Crypto Analysts, meanwhile, believes that the $21,500 area is a key area for consolidation. According to him, if Bitcoin manages to reach this milestone, the road to $23,000 could be cleared. Otherwise, a whole host of other bull traps could still surface.
Especially since many indicators tend to support the final decline hypothesis. This is especially true when analyzing the average duration of bearish cycles. Average period is about 12.5 months on the crypto market. It started last November, and we are approaching this era. The percentage loss per cycle between the last ATH and the low point also suggests that a return below $15,000 is still possible. A possibility that some analysts offer the final scare.