As we rapidly approach the end of the year Bitcoin, the cryptocurrency with the largest market capitalisation continues the bearish sentiment. FTX’s bankruptcy has wide-reaching implications throughout the crypto market. On November 11, key cryptocurrency exchange FTX filed for bankruptcy.
Bitcoin, Ethereum and other cryptocurrencies started the new week on a mixed note and the pairs have shown very little price movement over the past 24 hours. Bitcoin (BTC) dropped more than 2.5% last week as investors dumped risk assets after the aggressive tone of the US Federal Reserve and the European Central Bank.
During the last week, the price of Bitcoin bounced above $18,000 on Wednesday, December 14th morning prior to the FOMC meeting for the first time since FTX’s spectacular collapse after the latest US inflation data came in lower than expectations. While the recession fears and hawkish comments from Central banks later the week capped the advance. As of this writing, Bitcoin (BTC) trades below $17,000.
In addition, the bearish sentiment was also fueled by the negative comments from Jim Cramer. He advised investors to sell their holdings due to the high volatility in the cryptocurrency markets, which he believes will continue to struggle.
$BTCUSD short-term technical outlook
Technically the current price action signals suggest that the bearish trend remains intact. If Bitcoin continues to fall this week, the first support for the BTC appears to be around 16,000 followed by 15,500, any break below 15,500 the next downside level to watch is 15,000 then 14,700. On the flip side, the first immediate resistance level for the pair is near the 17,300/400 area, then the stronger resistance is 18,000, breaking above this resistance level then expect the market to zoom up to 18,500 and 19,000 minimum.
Is there more downside or will we see a recovery?
In the medium term, the bearish sentiment is expected to continue due to growing fears of the US slipping into a recession after Fed Chair Jerome Powell signaled ongoing rate increases are necessary to fight inflationary forces. However, as we progressed through the final days of the year, liquidity will be lower than usual, which could generate some spikes in both directions.
In the long-term, the decline is more extensive, and it will be hard to rule out a run towards 10,000 and 7500 if the strong bearish sentiment continues. While considering the strong bearish sentiment we can expect it to rise quickly and strongly as things start to settle again. For the long-term buyers, wait for the pair to at least reach and give a monthly close above $20000.
For this week, the main drivers for Bitcoin remain the recession fears and the movement of the US dollar. On the other hand, investors should also pay attention to the key U.S. economic figures this week which could influence the cryptocurrency markets in the near term.
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