Bitcoin (BTC) starts the week leading up to Christmas on a tear as a tight trading range brings little joy to BTC bulls.
A weekly close just above $16,700 means that BTC/USD remains free of major volatility in the absence of overall market direction.
After seeing erratic trading behavior around the recent US macroeconomic data print, the pair has since returned to an all-too-familiar status quo. What could have changed it?
That’s the question on every analyst’s mind as markets limp into Christmas with little supply.
The reality is harsh for the average bitcoin holder. BTC trades two years and even five years ahead. “FUD” is hardly lacking due to the fallout from FTX and concerns about Binance.
Meanwhile, there are signs that miners are recovering, while the chain indicators signal that the time is right for a classic macro price bottom.
Will Bitcoin Disappoint in the New Year or Will the Bulls Get the Santa Claus Rally They So Much Need? Cointelegraph looks at the factors behind the upcoming BTC price action.
BTC Spot Price: ‘Capitulation’ or ‘Slow Grinding’?
Closing the week just below $16,750, Bitcoin escaped without a fresh bout of volatility on December 18.
Even the one that accompanied US inflation data and Federal Reserve comments was short-lived, and BTC/USD has since returned to an admittedly disappointing status quo.
Data from Cointelegraph Markets Pro and TradingView prove this point. since the FTX scandal broke in early November, Bitcoin has seen almost no noticeable price movements.
The question for market commentators, then, is what will it take for things to take a different turn, up or down?
Staring Fibonacci retracement levels on the weekly chart, analytical resource Stockmoney Lizards revealed that BTC/USD is at “major support”.
If the area around $16,800 starts to disappear, the next one will be around $12,500.
Another chart from the weekend compared to what it called “final washes” for bitcoin in past bear markets. This reinforced the idea that BTC/USD may be almost done “copying” previous macro floor structures.
Others believe the worst is yet to come for the current cycle. Among them is well-known trader and analyst Crypto Tony, who is among those targeting the low potential around $10,000.
“Thus, in 2023, I expect BTC to begin forming a bottoming pattern at the lower end of the range we currently sit in, as well as volume support around $11,000 – $9,000,” he reiterated. Twitter thread this weekend.
“Whether we capitulate or evolve slowly remains to be seen.”
He added that after the mass capitulation, the “accumulation phase” will only continue until 2023 as Bitcoin prepares for its next block subsidy halving event.
New US data as analysis predicts plunge in risk assets
After last week’s drama with inflation data and the Fed, it’s safe to say that the coming week will provide slightly less pressure for Bitcoin.
That said, third-quarter US gross domestic product (GDP) growth is expected to be positive after the second quarter saw a 0.9% contraction.
This is significant because the US technically slipped into recession in Q2, despite politicians’ best efforts to deny that the financial picture was as dire as the data suggested.
As market investor Ajay Bagga points out, however, too strong a reversal in GDP will allow the Fed to continue aggressive rate hikes to tame inflation, which is undesirable for risk assets, including crypto.
“The US Atlanta Fed US GDPNow model estimate for US real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2022 was 3.2 percent on Dec. 9, down from 3.4 percent on Dec. 6,” he said. wrote in last week’s update.
“A very strong US GDP reading from a mostly accurate estimator. The Fed will step up and continue the campaign.”
Beyond GDP, the personal consumer spending (PCE) price index, a measure the Fed watches closely when considering policy changes, is also due.
In its latest market update on December 17, trading firm QCP Capital also drew attention to the PCE impact.
“Thanks to the Fed, whatever we’re trading now, we’re just trading inflation (and wage) prints,” it summed up.
QCP, however, had a word of caution for risk asset markets, which will bear down on everyone, including crypto, in the near term.
“As we write, this 4Q rally has created a perfect 4th wave, with a recent 5th wave lower for all markets: S&P/Nasdaq, 2y/10y, USD and BTC/ETH.” , it says.
Crypto Tony shared that sentiment, predicting what he called a “momentum low” in equity indices ahead of the rebound.
“I was looking for a push to make a double top around 4,320, but we couldn’t get there and gave up,” said an analysis of the S&P 500’s performance.
“Same picture here where I’m looking for another momentum low to complete the WXY pattern I’m seeing.”
Binance CEO calls out ‘FUD’ as claims of foul play continue
Where FTX started, Binance is now following.
That’s the main takeaway from the crypto media sweep earlier in the week, with Binance firmly on the radar as it battles what CEO Changpeng Zhao has repeatedly called “FUD.”
The world’s largest crypto exchange by volume has faced media and user backlash in recent weeks as its attempts to prove its reserves have failed to convince.
As reported by Cointelegraph, one of the latest developments is that Binance’s auditor has deleted its additional disclosures about the exchange’s financial promises.
Reuters, a report that Binance has publicly denied, has meanwhile raised a number of other concerns, including a blog post alleging suspicious activity between Binance and its US partner Binance US :
“These findings clearly align with previous reports from Forbes and Reuters that show Binance.US was a clever ploy designed to deceive regulators and customers,” concludes Dirty Bubble Media. the record of the organization called.
“However, with the collapse of FTX, everyone is taking a closer look at the crypto industry. We suspect that Binance’s regulatory Tai Chi will allow them to evade the long arm of the law for much longer.”
Zhao, meanwhile, continues to plead guilty to no charges on December 17 repeating his “FUD” perspective. He then echoed the words of Ryan Selkis, founder of the analytics platform Messari, in which he stated that there was an element of “xenophobia” in the criticism of Binance.
“A good portion of Binance FUD is just thinly veiled xenophobia,” Selkis wrote more than two tweets.
“I’m all for deposit stress testing and I think it’s bad that such a high percentage of volume goes through one exchange. I also don’t like the tone of some of the criticisms. Sorry!”
However, Binance remains one of the best potential price triggers for BTC, as Cointelegraph pointed out last week.
Miners compete
After its biggest drop in nearly 18 months, Bitcoin’s network difficulty is set to rise again this week.
According to BTC.com estimates, the next fortnightly difficulty adjustment will see an increase of around 3.8%.
This has implications for miners who have experienced significant shocks in the weeks since FTX sent BTC/USD down as much as 25%.
After the earnings squeeze, fears began to emerge that miners were due for another major capitulation event and that they would exit in droves.
As Cointelegraph recently reported, however, not everyone agrees. recent interpretations of the data have led to the conclusion that most domestication has already occurred.
With increasing difficulty again, this theory remains a valid observation, as increasing difficulty implies more severe competition among miners, rather than retreat.
Data from on-chain analytics firm Glassnode additionally shows a 30-day decline in miners’ BTC reserves as sales cool off.
At the same time, analyzing the total share of miners in the supply of BTC, journalist Colin Wu argued that their position is not necessarily significant.
It is estimated that Bitcoin miners currently own a maximum of 820,000 Bitcoins, a minimum of 120,000 Bitcoins, only 1% to 4% of Bitcoin turnover, even if listed mining companies sell production by 350% in June this year, the impact is also there. weakened,” some of the comments on Twitter to read on weekends.
Sentiment is projected to decline to 2022 lows
It’s no secret that cold feet is the name of the game when it comes to crypto sentiment this quarter.
Related: Bitcoin Still Lacks This Chain Signal For BTC Bull Market – David Puell
Thanks to FTX and now Binance, a distinct sense of doom hangs over social media, and the price action of crypto assets has yet to paint a different picture.
That said, the Crypto Fear & Greed Index is doing significantly better than expected, still standing off its all-time low of “extreme greed”.
At 29/100, the index can even be said to be somewhat sentimental.
For Crypto Tony, however, this will be short-lived as the index will return to this year’s low of just 6/100 in 2023.
“When we’re in extreme fear, it’s seen as a good buying zone. If we are in extreme greed, then it is a selling zone. Based on human psychology,” one of the comments explained.
“Back in June we got to 6 ‼️ I expect we’ll be revisiting it next year.”
Fear & Greed exited “Extreme Fear” at the end of November and has yet to return, reaching a peak of 31 on December 15th, its best performance since November 8th.
The views, thoughts and opinions expressed herein are solely those of the authors and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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