Bitcoin eager to return to December lows amidst Fed jitters
By Noemi Jansana / Alejandra Zamora
Date: Tuesday 14 Dec 2021
(Sharecast News) - There´s a new wave of selling in the cryptocurrency market, as the 20 main tokens in the market are firmly anchored in the red, due to investors' nervousness about the imminent monetary policy decision of the US Federal Reserve (Fed). Bitcoin lost the support of $47,000 on Monday and touches lows since December 4th, slightly below $46,000, according to data from 'CoinMarketCap'. Bitcoin also closed below this level, a clearly bearish signal for analysts who warn that $42,000 could be just around the corner for the queen of cryptocurrencies.
As for the rest of the tokens, Ethereum leads the falls and also leaves minimums not seen since the 'flash crash' of December 4th, below 3,700 dollars. Meanwhile, the rest of the main 'altcoins' yield about 7% on average. Total capitalization also lost the $2.2 trillion barrier and is barely above $2.1 trillion now, as investors pull back from risk assets while they discount that the Fed will make public its decision to accelerate the tapering of its bond purchases and signal that it will begin raising interest rates next year.
The low interest rate environment has sent both stocks and cryptocurrencies soaring this year. However, a rate hike and a faster-than-expected end to easy money policies could cause the market to turn bearish.
"Bitcoin is back below $50,000 and really struggling to find any bullish momentum when the price does rebound," commented Craig Erlam, an analyst at Oanda. "An improvement in risk appetite hasn't even helped the cryptocurrency which could be facing a move back towards the levels seen during the flash crash earlier this month if $47,000 falls," he added, stating that an unexpected collective reduction in central bank tightening expectations "will get the cryptocurrency community excited again this week."
Generally speaking, after the collapse in the cryptoassets market last November, investors are cautious in trading cryptos as they lost important supports, with many of them trading at levels of last September. During the coming hours, "it will be vital for Bitcoin, which has hit resistance at $50,000, to hold at $46,000," explained IG Markets.
From the point of view of technical analysis, "the problem in the short term is that anything can happen," stated José María Rodríguez, technical analyst at Bolsamanía, as he explained that "we have the king of cryptocurrencies in a no man's zone, halfway between the important support of $40,000-$41,500 (the September lows) and far from the resistance of $53,600, let alone $60,000". "In terms of the very short term, it has support just around the corner at last week's lows ($47,215) and resistance at last week's highs ($52,195)," he noted.
"And all of the above within a clear long-term, underlying uptrend, which has not been threatened in the slightest," assured Rodriguez, although the market increasingly takes hold of the idea that another session of steep falls could damage the medium-term trend despite the oversold signals. "Unlike other market moments, no more or less clear potential pattern can be observed," the Bolsamanía expert concluded.
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