Will Bitcoin (BTC) disappoint more in the new year? Or will the bulls start the Santa Claus rally? What will the cryptocurrency markets experience in the last week of the year? Here are the factors that will affect the prices of cryptocurrencies this week…
In which direction will the Bitcoin price break?
Bitcoin, which closed the week just under $ 16,750, ends on December 18 without a new wave of volatility. BTC started to show a dull performance as it consolidated again. In addition, the movement created by the US inflation data and FED comments was short-lived. Since the FTX scandal erupted in early November, Bitcoin has seen almost no discernible price action. Analyzing source Stockmoney Lizards, which looks at the Fibonacci retracement levels on the weekly chart, suggested that the BTC pair is at “key support”. If the area around $16,800 starts to disappear, the next zone is around $12,500.
Some experts said the worst for the current cycle is yet to come. Among them is Crypto Tony, which marked a low around $10,000. Also in a Twitter thread this weekend, Tony said:
… In 2023 I expect BTC to start forming a bottom pattern at the lower end of the range we are currently in and volume support to be around $11,000 – $9,000… We will see if we capitulate.
New US data coming as analysis predicts cryptocurrency drop
Post inflation data and the Fed, there will be less pressure for Bitcoin this week. However, the US third quarter GDP’2 is expected to grow. This is expected to turn positive after seeing a 0.9% decline in the second quarter. This is important as the US technically entered a recession at the 2nd Quarter edition, despite the efforts of politicians to deny that the financial picture is dire.
However, as market investor Ajay Bagga points out, an overly strong GDP return would empower the Fed to pursue aggressive rate hikes to rein in inflation. This is undesirable for all risk assets, including cryptocurrency. In an update last week, “US Atlanta Fed US GDPNow model forecast for real US GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2022 from 3.4% on 6 December to 3.2% on 9 December. fell,” he wrote. Trading firm QCP Capital noted the PCE impact in its latest market update on Dec. 17, writing:
Thanks to the Fed, we’re just trading inflation (and wage) pressures, no matter what we’re currently trading. A caveat is needed for QCP’s risky asset markets, though. A drop is coming for everyone, including cryptocurrencies, in the near future.
Binance anxiety continues in crypto money markets
Binance’s proof-of-reserve attempts have not been convincing. However, it faced backlash from both the media and users. As we reported on cryptokoin.com, recent events include Binance’s auditor’s deletion of complementary findings regarding the exchange’s financial promises. However, an organization that calls itself Dirty Bubble Media shared the following in a statement:
…These findings neatly line up with previous reports by Forbes and Reuters that showed Binance.US to be a clever trick designed to deceive regulators and customers. However, with the collapse of FTX, everyone is taking a closer look at the crypto industry. We doubt that Binance will be able to evade regulatory laws for longer.
Still, Binance remains one of the biggest potential triggers for BTC price. Ryan Selkis also shared about Binance and said:
I’m in favor of stress testing on deposits and I think it’s bad for such a high percentage of volume to go through a single exchange. I also don’t like the tone of some of the reviews.
Miner competition is increasing
After the biggest drop in nearly 18 months, Bitcoin’s network difficulty will start to rise again this week. This has ramifications for miners, who have experienced significant confusion in the weeks since FTX dropped BTC by as much as 25%. With profits shrinking, concerns began to arise that there would be another major capitulation of miners and that they would withdraw en masse from their operations. But not everyone agrees: The latest interpretations of the data have led to the conclusion that the vast majority of climate adaptation has already taken place.
This theory remains a valid observation, due to barely rebounding. Because increased difficulty means a sharper competition between miners rather than a pullback. Data from on-chain analytics firm Glassnode also shows that the 30-day decline in miners’ BTC holdings is returning as cold selling. However, analyzing the overall share of miners in the BTC supply, journalist Colin Wu said that their position is not so important.
Cryptocurrency sentiment predicted to drop to 2022 lows
Thanks to FTX and now Binance, there is a distinct sense of panic on social media. However, the Crypto Fear and Greed Index is performing significantly better than expected. It also still stands above the lowest level of “extreme greed”. At 29/100, the Index could even be said to be a bit detached from the mood. But for Crypto Tony, this will be short-lived. Thus, the Index will return to this year’s lowest level of 6/100 in 2023. Tony said on the subject:
It is seen as a good buy zone when we are in extreme fear. If we’re in extreme greed, it’s a sell zone. Based on human psychology,” some of the comments were explained. We reached 6 in June ‼️ I look forward to visiting this again next year. Fear & Greed came out of “extreme fear” at the end of November and has yet to return.
In addition to all these developments, the important events to follow this week are as follows:
- Monday, December 19
He may reverse his decision to appeal Sam Bankman-Fried’s extradition to the United States. - Thursday, December 22
The CBRT will announce its interest rate decisions (14:00)
US Gross Domestic Product (GDP) will be announced at 16.30′). Expected 2.9 percent
Applications for U.S. unemployment benefits will be announced. Expected 225 thousand - Friday, December 23
US Personal Consumption Expenditures (16.30 GST)
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