Bitcoin (BTC) starts the new week in risky territory as a whale selloff changes the mood.
The latest weekly close did little to comfort anxious traders as BTC price activity continued to stall.
With just two weeks left until the end of the annual candle, the countdown has begun with pressure across risk assets.
Macro data releases, a key near-term volatility catalyst, will continue to be released for the remainder of December, with US GDP data expected as markets digest last week’s moves from the Federal Reserve.
For now, with Bitcoin’s “Santa rally” tapering off and high fees leaving a bitter taste in hodlers’ mouths, commentators are suggesting a renewed focus on approving a potential spot ETF next month.
Potential hope comes from market sentiment both within and outside of cryptocurrencies. While “greed” characterizes the landscape, unsustainable conditions are nowhere to be seen, potentially leaving room for further upside as “mistrust” emerges.
Cointelegraph takes a closer look at these factors as crunch time approaches for annual BTC price performance.
Analysts line up key BTC price support levels.
The close for the week of December 17th was around $41,300, coming in the midst of a local sell-off in BTC/USD.
Bitcoin continued its downward trend overnight, bouncing just above $41,000 during the Asian trading session before hitting $40,800, according to data from Cointelegraph Markets Pro and TradingView.
Traders and analysts, already wary of the possibility of further declines following recent BTC price movements, remained cautious.
“Charts Don’t Lie”, Trading Resources Important Indicators are summarized in the very beginning. post On this day at X (formerly Twitter).
Material Indicators noted that Bitcoin lost its 21-day moving average in the new week. This is “inherently bearish,” he says.
He added, “We expect to realize year-end profits and collect tax losses in the short term.”
Continuing, co-founder Keith Alan flagged the ongoing battle over the key Fibonacci retracement level of the November 2021 all-time high.
It is too early to tell whether this December 17th pattern will come to fruition. We can make those decisions at the end. For now, it’s safe to say: #BTC Bulls need to push the price above .5 Fib to reclaim their golden bag or risk losing the 21-day moving average… pic.twitter.com/Tjc4lkKEc2
— Keith Allen (@KAProductions) December 17, 2023
Popular Trader Skew Added Some lines in the form of the 4-hour 200-day and 300-day exponential moving averages (EMA) and the 50-day EMA are both currently around $2,500 below the spot price.
“There are two technical levels here at 1W/1M,” he continued, commenting on weekly and monthly time frames.
“$39K – $38K ~ Potential support for HTF, would be an appropriate bid once unsustainable pressures come down. $47K – $48K ~ HTF resistance, unsustainably rising higher would be a good area to take profits.”
PCE to be paid for by GDP as confidence in Fed “pivot” grows
US macro events will be dominated next week by the November release of the Federal Reserve’s preferred inflation indicator, the Personal Consumption Expenditures (PCE) index.
After a number of key Fed decisions last week, the data should now continue to show inflation declining in the new year.
The next Federal Open Market Committee (FOMC) meeting to decide on interest rate changes is not until the end of January, but since last week, there has been speculation in the market that a ‘pivot’ will become a reality.
The market is pricing in a 25 basis point rate cut by July 2024 after today’s Fed meeting. pic.twitter.com/zWXiUqx96Q
— tedtalksmacro (@tedtalksmacro) December 14, 2023
The odds of a rate cut at the next meeting are currently around 10%, according to the latest data from CME Group’s FedWatch tool, with key macro numbers not yet available.
“Even as inventories increase, uncertainty is still everywhere,” concluded trading resource Kobeissi Letter in an X post outlining next week’s print.
Key events this week:
1. November Building Permit Data – Tuesday
2. Consumer Confidence Data – Wednesday
3. Existing Home Sales Data – Wednesday
4. Third quarter 2023 GDP data – Thursday
5. November PCE Inflation Data – Friday
6. New Home Sales Data – Friday
Another busy week…
— Kobeissi Letter (@KobeissiLetter) December 17, 2023
In addition to the PCE, jobless claims and third-quarter GDP revisions are both scheduled to occur on December 21.
As Cointelegraph reported, the strength of the U.S. dollar hit multi-month lows led by the FOMC as a new wave of energy hit the cryptocurrency market. Those lows have now disappeared as the US Dollar Index (DXY) has recovered modestly, still down about 1.9% in December.
Fees keep rising
The heated debate over Bitcoin transaction fees has amplified in recent days, thanks to them hitting their highest since April 2021.
When Ordinals came back into the spotlight, people wanting to transact on-chain had to pay a $40 fee over the weekend. “OG” commentators, on the other hand, argued that the fee market was simply functioning as intended, taking into account competition for block space.
As a result, miners’ profits soared. This is a level Bitcoin has not witnessed since its all-time high of $69,000.
However, fees have already dropped significantly in the new week, with the next block transaction confirmed to be under $15 as of this writing.
Commenting on the situation, popular social media personality Fred Krueger argued that market participants should now turn their attention to a decision on the first US cash exchange-traded fund (ETF) to be launched early next month.
He defended Ordinals creators’ right to use blockchain to store their work, noting that fees are “already falling rapidly.”
“This debate appears to amount to nothing at the moment. “I ended up waiting for ETF again,” he said. conclusion.
Others, including researcher and software developer Vijay Boyapati, have also noted the episodic nature of fee controversies that have occurred throughout Bitcoin’s history.
#Bitcoin Trolls’ concerns circa 2017: “The Bitcoin network will not be secure because block subsidies will be reduced and transaction fees will not be sufficient!!!”
The concern about Bitcoin today is that “transaction fees are too high!!!”
— Vijay Boyapathi (@real_vijay) December 17, 2023
As a result, calls for so-called “level 2” solutions to speed up development and reactions to recently increased fees have highlighted that off-chain solutions already exist for users in general, and for the Lightning Network in particular.
“L1 fees are currently prohibitively high. “It seems clear, even if selfish, that defaulting most transactions to the Lightning Network is the way forward for all exchanges and wallets.” David Marcus, former Facebook executive and current co-founder of lightning startup Lightspark. wrote This is part of X’s posts from the weekend.
According to data from monitoring resource Mempool.space, demand for block space remains large and the backlog of unconfirmed transactions still reaches 300,000.
New address poses bull market momentum risk
Bitcoin network growth this month took a breather in line with the bull market recovery.
The number of new BTC addresses continues to decline throughout December, according to new data from on-chain analytics firm Glassnode.
On December 17, the latest date for which data is available, approximately 373,000 addresses appeared in on-chain transactions for the first time. That’s about half the recent local daily high that Glassnode reported in early November.
Commenting on the figures, popular social media analyst Ali described the shrinking of new addresses as “noticeable” and an obstacle to BTC price growth.
“There has been a notable decline in Bitcoin network growth over the past month, raising doubts about the sustainability of $BTC’s recent $44,000 rise,” he said. wrote.
“It is important for the number of new $BTC addresses to increase for the bull rally to continue strongly. “This will provide the necessary support for continued bullish momentum.”
distrust behind fear
As Bitcoin’s “up only” phase cooled recently, market greed stopped correspondingly.
Related: ‘No Excuses’ for Buying Crypto: Arthur Hayes Repeats $1 Million BTC Price Bet
According to the latest data from the Crypto Fear & Greed Index, the majority of cryptocurrency market participants have had a moment of reflection over the past week.
Currently, the cryptocurrency’s sentiment gauge, Fear & Greed, is at 65/100, the least heated in almost a month, although it still defines the overall sentiment as “greedy.”
Zooming out, an index score above 90/100 corresponds to a long-term market high, with irrational enthusiasm becoming the mindset of the average market participant. As Cointelegraph reports, a notable exception is the 2021 all-time high of $69,000, which reached 75/100 before fear and greed reversed.
Meanwhile, Caleb Franzen, senior analyst at Cubic Analytics, commented on the current state of traditional market indices, suggesting that sentiment is still playing out due to the extended Fed tightening cycle that began in late 2021.
“The fear and greed index falls in the ‘greed’ range. However, just four weeks ago, it was in a state of ‘fear,’ and for 2.5 months from September to November, it was in a state of ‘neutral’ to ‘extreme fear.’” said December 14th X subscribers.
“Euphoria? No. It’s disbelief.”
This article does not contain investment advice or recommendations. All investment and trading activities involve risk and readers should conduct their own research when making any decisions.