KEY POINTS
- Bitcoin faltered in the past week and destroyed its eight-week price appreciation streak
- Its dominance saw a 0.35% decrease from 53.46% to 53.11%
- Bitcoin was trading in the green zone at $43,004.63 Tuesday morning
Bitcoin (BTC) rallied above the $44,000 price level last week, but hit a significant resistance near $45,000 and started receding. While the dominance of the "king of crypto" plummeted, the latest developments on spot Bitcoin exchange-traded fund (ETF) filings sparked hope and ignited speculations that it might hit the $45,000 level this week.
Bitcoin ended last week at around $41,400, recording a 5.5% loss from the previous week's closing value of around $43,800. It continued to dip Monday, reaching a weekly low of about $40,425.
Bitcoin faltered and destroyed its eight-week price appreciation streak, as around $345 million worth of long and short positions were liquidated in the past week – the liquidations impacted long positions of around $235 million.
"High volatility is a typical outcome following periods of significant uptrends and downtrends, triggering a cascade of liquidations that reduce market leverage and contribute to a more sustainable price action and market environment. Traders often capitalize on moments of heightened volatility to attract liquidity and readjust their positions," Matteo Greco, a research analyst at digital asset and fintech investment business Fineqia International, said in a note sent to International Business Times.
The analyst also pointed out that Bitcoin dominance saw a 0.35% decrease from 53.46% to 53.11% last week, which indicates "the robust resilience of altcoins compared to the leading digital asset during the recent downtrend. This suggests active investor engagement, as this pattern typically occurs when investors swiftly allocate capital across various altcoins in search of short-term profitability."
However, Greco is optimistic as an analysis of the daily volume on centralized cryptocurrency exchange platforms revealed a $36 billion surplus, which "represents the highest level recorded since March 2023, affirming strong trading activity that contributes to increased volatility."
The analyst believes the U.S. Securities and Exchange Commission would announce its decision on Bitcoin ETF applications during the comment window.
"The final deadline for the SEC decision on the 21Shares BTC Spot Filing is scheduled for the 10th of January, with the comment window closing on the 5th of January. The 6-day window from the 5th to the 10th of January is when the SEC is expected to provide a final approval or rejection for the 21Shares filing, coinciding with a cascade of approvals or rejections for other BTC filings. Analysts continue to predict a 90% probability of receiving a green light from the SEC," the analyst said.
This week, spot Bitcoin ETF applicants made major amendments to their registrations, which generated positive market sentiment. After ARK and BlackRock caved in to the SEC's instruction on the use of cash creation and redemption model, Bitcoin climbed back and traded above the $43,000 price level.
Many view the positive development as the start of the crypto asset's rally, which could end up hitting the $45,000 price target.
On-chain analysts at Santiment underscore that Tuesday's crypto rally is a reaction to traders' fatigue or fear, which kicked off last Friday.
"In the latest case of 'traders get fearful, market prices get cheerful,' #crypto market caps rebounded big on Monday. After market fatigue began kicking in last Friday, posts about #Bitcoin began skewing very negative in tone. With this being one of the most indicative signals of smaller wallets selling to larger wallets, price rebound chances increase significantly. Now that $BTC has surged back to $43.2K (at this time), watch to see if traders flip back to being euphoric, which would be a top sign," Santiment said.
😰🥳 In the latest case of "traders get fearful, market prices get cheerful", #crypto market caps rebounded big on Monday. After market fatigue began kicking in last Friday, posts about #Bitcoin began skewing very negative in tone. With this being one of the most
— Santiment (@santimentfeed) December 19, 2023
(Cont) 👇 pic.twitter.com/nNtFwcJqFN
Bitcoin rallied to $43,500 Tuesday morning following its weekend recovery.
The world's oldest crypto asset is predicted to rally toward the Fair Value Gap between $44,730 and $45,369. Once the gap is filled, it is expected to experience another drop or price correction.
Bitcoin was trading in the green zone at $43,004.63 as of 5:47 a.m. ET on Tuesday, with the 24-hour trading volume up by 24.97% at $24,951,025,652. The latest price action represents a 5.05% increase in its value in the past 24 hours and a 2.86% gain over the last seven days.
Bitcoin's currency circulating supply stands at 19.57 million BTC and its market cap is at $24,951,025,652, according to data from CoinMarketCap.
