Bitcoin faces a giant inefficiency on short timeframes as a week full of potential volatility starts with a wobble.
saw its first weekly close above $100,000, which was a volatile start to a new trading week.
- Weekly close records do not last long as analysis warns that the market should fill a $10,000 downside wick from last week.
- CPI week dawns, and the United States Federal Reserve is less than 10 days from its next interest rate decision.
- China announces its first policy-loosening move in nearly 15 years, starting in 2025.
- Microsoft is due to vote on creating a Bitcoin treasury in what could become a major week for corporate Bitcoin adoption.
- BTC price analysis sees “choppy” conditions characterizing the market for the short term, with the next stop-off point at $110,000.
BTC price dip: “Sooner rather than later?”
Bitcoin saw a last-minute surge on Dec. 8, allowing it to set a new record weekly close above $100,000.
The first-ever close in six figures was short-lived, with BTC/USD heading below $99,000 and trading down 2.8% on the day at the time of writing, per data from TradingView.
“Still unable to sustain above $101K,” trader Skew said in his latest market analysis on X.
Skew explained that a combination of nearby resistance factors kept bulls from edging higher toward price discovery.
“Looking for strength & demand from here to lift the market higher / confirm $98K area as support. Else continued weakness means sit on hands for a bit,” he concluded.
Fellow trader CrypNuevo adopted a cautious tone. Bitcoin, he argued, needs to backfill half of the giant daily candle wick to $92,000 printed during a liquidation cascade on Dec. 5.
CrypNuevo added that there was a 96% probability that the wick would be filled, calling it an “imbalance” that would hold back the market in the meantime.
“Is it a possibility that price goes up from here (breakout) without filling the 50% wick at $94k?” he wrote in part of a new X thread.
“Yes, it is. But I’d NOT trust that move because there is a major imbalance to the downside that needs to get filled sonner than later.”
CPI comes as markets see more Fed rate cuts
The Consumer Price Index (CPI) print for November marks the highlight of this week’s US macroeconomic calendar.
With less than 10 days until the Federal Reserve’s interest rate decision, markets are increasingly betting on policy easing continuing.
The latest data from CME Group’s FedWatch Tool indicates majority odds of 85% that a 0.25% rate cut will follow the Fed’s Dec. 18 meeting.
Officials continue to face a dilemma — rising unemployment and rising inflation — which together create an environment known as “stagflation.”
“All eyes are on CPI and PPI inflation data as markets hope to solidify another 25 bps rate cut,” trading resource The Kobeissi Letter summarized, also referring to the upcoming Producer Price Index (PPI) release.
More unemployment data will accompany PPI, with crypto markets especially sensitive to the latter in 2024.
“The median duration of unemployment in the US rose to 10.5 weeks in November, the longest in 3 years. At the same time, the average unemployment duration rose to 23.7 weeks, the highest since April 2022,” Kobeissi noted at the weekend.
“Both metrics have been now rising at the pace previously seen at the onset of the last 4 recessions.”
China embarks on rare fiscal easing
A classic macro boost for Bitcoin may yet come from China as soon as 2025.
China has announced that it plans to relax fiscal policy next year — the first such shift since 2010 and a move seen as highly symbolic by risk-asset traders.
As quoted by media publications, including Reuters, on Dec. 9, Beijing sees the need to ensure that policy is “appropriately loose” going forward.
The potential influx of liquidity, which could come as a result, will likely be keenly felt by crypto markets. Earlier this year, Chinese fiscal stimulus injections had a near-instant impact on BTC price momentum.
Analyzing 10-year bond yields, Dan Tapiero, founder and CEO of 10T Holdings, said that they represent the “most important off-the-radar macro chart in the world right now.”
“Negative real interest rates in CH takes edge off US inflation fears. USD strengthens, rates drop, Ndx up. +Liquidity,” part of a dedicated X post stated this weekend.
For investment research firm HFI Research, however, it is specifically bonds that stand to benefit from any positive liquidity changes.
“China is about to find out that it’s following a similar path as Japan,” it told X followers last week.
“The more monetary stimulus it does, the more liquidity flows into bonds as opposed to risk assets. Why? Because people are skeptical that the fiscal stimulus will work.”
Microsoft to decide on Bitcoin strategy
Institutional Bitcoin adoption may hit the headlines in the coming days as technology giant Microsoft votes on whether to add BTC to its balance sheet.
Following a pitch by Michael Saylor, CEO of business intelligence firm MicroStrategy, to its board, Microsoft now faces a decision as to whether to copy his Bitcoin treasury.
On Dec. 1, Saylor shared the slides from his presentation, calling Bitcoin the “highest performing uncorrelated asset that a corporation can hold on its balance sheet.”
“Microsoft should be powered by Digital Capital,” one stated.
Rumors also center on fellow tech giant Amazon considering a Bitcoin treasury after a proposal to its board by the National Center for Public Policy Research, a US think tank.
the proposal took aim at CPI, due this week, calling it a “remarkably poor measure of inflation.”
“Is Amazon buying Bitcoin?” Charles Edwards, founder of quantitative Bitcoin and digital asset fund Capriole Investments, queried in one of his various speculative responses to the news on X.
Last week, research suggested that MicroStrategy could survive an 80% BTC price drawdown without serious consequences for its balance sheet.
A choppy new year?
Despite its run-up to new all-time highs, Bitcoin may face a protracted consolidation period and increasingly stubborn resistance levels.
That is according to analysis from CryptoQuant, which sees “choppiness” characterizing short-term BTC price behavior.
“The 14-day Choppiness Index is in an early zone showing corrective moves during consolidation,” contributing analyst Percival reported in one of its Quicktake blog posts.
The Choppiness Index is not unique to Bitcoin, but on daily timeframes, it suggests that a breakout from the current trading range on BTC/USD is increasingly unlikely.
The 15-week highs mean that the pair is now “choppier” than at any time since mid-August.
Percival flagged two price points worth noting in the battle against the chop: $110,000 and $120,000, both of which correspond to levels of profitability for Bitcoin speculators.
For this, he leveraged the realized price of short-term holders (STHs) — entities hodling a given amount of BTC for 155 days or less.
The psychological pull of the $120,000 mark, he explained, makes that level a future “deeper consolidation camp.”
Risk Disclaimer
Although Sponsored Trading can be profitable, it is associated with a significant risk of losing your investment. The risks will increase when trading on margin companies. Traders must exercise due diligence and be careful when making their trading decisions. It is the sole responsibility of the Trader to learn and acquire the knowledge and experience required to use the Trading Platform and anything that will be required to trade properl
