Bitcoin is below $50,000 and "will remain sideways until the Fedīs decision"
By Noemi Jansana / Alejandra Zamora
Date: Monday 13 Dec 2021
(Sharecast News) - Traders in the cryptocurrency market have learned the lesson that Bitcoin left them with on December 4th. Because of this, they have thought twice before settling into leveraged positions this past weekend. All in all, the queen of cryptocurrencies returned to one-week lows on December 11th, slightly below $47,000, while rallies have been capped for four consecutive sessions at $50,000. This scenario leads analysts to believe that the sideways market will continue until the decision of the US Federal Reserve (Fed) is known.
As for the 'altcoins', despite the fact that last week Ethereum performed much better than Bitcoin, it is barely above $4,000 on Monday. Ethereum left new lows on Saturday, up to $3,850 in round numbers. The rest of the tokens leave widespread declines and the total capitalization stands at around $2.25 trillion.
Bitcoin prices initially surged on Friday after US inflation hit a 39-year high, but the rally stalled at the $50,000 barrier. Analysts shelter behind this behavior and proclaim that the digital currency doesn't really work as a parapet to inflation, as it was pointed out recently, as this idea is speculative in and of itself. In general, hopes that the cryptomarket will stage one last rally before the end of the year fade at full speed.
Until recently, most voices were clamoring for another bull run before December 31st, but now, the market consensus points to an end of the year at current values, with $53,000 as the ceiling for upside.
"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," he added.
Although no one has a crystal ball to know what will happen to Bitcoin during the next month, "one thing is certain: the last two weeks have helped us discard the idea that Bitcoin is a safe-haven asset and that itīs a hedge against inflation," stated Ipek Ozkardeskaya, analyst at Swissquote.
GOOD NEWS FROM THE MINERS
Despite this gloomy outlook, there is good news coming from the cryptosphere. Specifically, miners regained the performance prior to China's shutdown of all cryptocurrency-related activity.
Beijing conducted its biggest crackdown on cryptocurrencies this year, forcing the largest migration of cryptocurrency miners from China to the United States. Investors should know that the 'hash' rate is a measure of the computing power consumed by miners on the Bitcoin network. When the Chinese authorities imposed a ban on cryptocurrency mining, the 'hash' rate dropped by almost 50% and due to this, the blockchain space took a big hit.
However, at the time, no one could have foreseen that Bitcoin mining would recover in just five months. Previously, mining in China made up 65% to 75% of global mining. Miners have managed to quickly move their operations to North America.
"The most important lesson to be taken from this development is that the future outlook of digital coins remains positive, as can be seen from the blockchain space not only surviving but rather thriving even after facing its biggest stress test," explained Naeem Aslam, analyst at Avatrade.
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