"The degree of panic has gone down." What will happen to bitcoin in the coming week
Experts analyzed the situation on the market and told how it may change in the short term
On the morning of December 5, bitcoin was trading at $17.3 thousand, the cryptocurrency has risen by 5.5% over the past week. Specialists have analyzed the situation in the market, explained the reasons for the latest growth in quotations and told about what dynamics to expect in the coming week.
"Bitcoin met resistance."
BitRiver financial analyst Vladislav Antonov
Increased volatility in the cryptocurrency market was observed in the first half of the week. On November 28, the pair BTC/USDt decreased to $15.9 thousand against the background of risk aversion. Investors sold risky assets because of worsening epidemiological situation in China, as well as hawkish rhetoric of representatives of the U.S. Federal Reserve in relation to the fight against inflation.
The growth of quotations resumed after the rally of stock indices and the weakening of the dollar at Forex. "The American" collapsed after the speech of the head of the US Federal Reserve J. Powell. He said that the Central Bank may slow down the rate increase at the December meeting. By the end of the working week, the bitcoin rate recovered to $17.3 thousand and stabilized in the range of $16.7-17.2 thousand.
On Friday, the U.S. labor market report for November was released. Monthly new jobs and hourly earnings came in above forecasts. The statistics caused a sharp increase in the dollar index and a drop in all risky assets. The report questioned whether the Fed would cut the pace of rate hikes.
According to the latest Chicago Mercantile Exchange data, the probability of a 50-basis-point rate hike in December is 78.2% versus 80.6% prior to the report. By the end of the day, the dollar lost all of its gains and the S&P500 index recouped all of its losses. The BTC/USDt pair has once again exceeded the level of $17K, but without continuing growth.
The S&P500 index settled on the daily trend line from the top of 4818 points. Bitcoin met resistance at $17.15-17.20 thousand. Risky assets survived the Friday.
The dollar index fell to 104.57p, trading near key support. There are still risks of a drop to 102.35p, which will have a positive effect on the dynamics of cryptocurrencies.
Based on technical analysis, with the current intraday pattern, buyers need to consolidate above $17.35k. In this case they will open the road to $18.5k. Above $18k it will be easier to wait for the results of the Fed meeting. Closing the trading day below $16.73 thousand will return the price to the level of $16.45 thousand. The market is still controlled by sellers, so do not be surprised if the price will fall within 1-2 hours by 5% or more.
"Stabilization will have a positive effect on the market."
Roman Nekrasov, cofounder of ENCRY Foundation
The general atmosphere in the financial markets remains tense, but the degree of panic has evidently decreased. On the whole, everything is not so bad: inflation has managed to be curbed at first sight and it means that the US Federal Reserve will not loosen the reins in managing inflation risks and will slow down the rate of key rate increase.
The S&P500 is growing and another collapse is not expected in the near future. This has a positive effect on bitcoin as well. Though it is in the bear market, it copes with the situation and doesn't fall further down and has managed to keep it in the area of $16.8-17 thousand, though many expected its fall to $15 thousand.
Next week, we should monitor the outcome of Sunday's OPEC+ meeting on possible oil output cuts to keep prices stable (but Arab countries are unlikely to do that) and not to forget about the PPI publication in USA which is a measure of inflation.
We are likely to see a stabilization there as well, which will probably have a positive effect on the market. Although some might see a decline in PPI as an increased risk of stagflation - stagnation on the back of inflation. We should not expect a rapid growth or resumption of the bull cycle.