"Bitcoin backers no more put off by latest declines than in May."
By Noemi Jansana / Alejandra Zamora
Date: Friday 10 Dec 2021
(Sharecast News) - The digital assets market is unable to shake off the bearish sentiment that dominates Bitcoin and altcoins trading since last weekend's 20% drops. The queen of the 'cryptos' is still wedged in a range between $46,000 as support and $53,000 as resistance, with $50,000 as the waterline. However, the downward pressure keeps the cryptoasset in the red.
As for the rest of the market, falls are once again the dominant sentiment for most digital tokens, with special attention on Ethereum, which fell back to almost $4,000 on Thursday, coinciding with the 'Arrow Glacier' update of its blockchain. This should not have any impact among investors in theory. Solana, Dogecoin and Shiba Inu are the cryptocurrencies that suffered the most during the past week, with falls among them between 15% and 20%. The total capitalization settles at $2.26 trillion.
"Bitcoin is back below $50,000 and struggling to get any real traction above as risk appetite cools," stated Craig Erlam, analyst at Oanda, something that "doesn't bode well for the cryptocurrency in the near term and as we've seen so often in the past, corrections can be deep and painful." However, "as we saw earlier this year, it has the ability to rebound quickly and scale new highs once more. Crypto backers won't be put off by the latest declines any more than they were in May," the expert added.
The renewed bear market spiked on Thursday as U.S. stocks fell and the dollar index (DXY), that tracks the value of the greenback against major fiat currencies, rose 0.28%. A strengthening U.S. dollar puts downward pressure on Bitcoin prices. Also, as 'CoinDesk' reports, Bitcoin trading volumes on major cryptoasset exchanges have continued to fall.
"Bitcoin maintains its long-term bullish momentum, but everything in the short-term looks bearish," noted Edward Moya, market analyst at Oanda. "Bitcoin will have to overcome rising expectations of a stronger dollar, an extended 'altcoins' season and near-term bearishness for risk assets as Omicron derails post-pandemic reopening momentum."
This situation causes predictions of a new rally leading the queen of cryptocurrencies to conquer new highs before the end of the year or early next year to fade at full speed. Buying activity in Bitcoin remains weak despite several oversold signals on the charts. That reduces the likelihood of a significant price rise heading into January, especially given the loss of upside momentum on the weekly and monthly charts.
Calls for caution are multiplying at full speed. Without going any further, a Natixis survey of 500 institutional investors from several countries - including four central banks, more than 20 sovereign wealth funds and more than 150 corporate pension plans - indicates that following the boom in this investment class after last year, they are the "prime candidate" for a "major correction" in 2022.
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