Bitcoin eyes record lows and is on track for its worst month since March 2020
By Noemi Jansana / Alejandra Zamora
Date: Thursday 30 Dec 2021
(Sharecast News) - December was a disastrous month for the cryptocurrency market. The fears that the irruption of the Omicron variant imprinted on the main markets and that set back most assets, in favor of the Christmas rally, weighed heavily on Bitcoin and altcoins, as well as on other risk assets. However, the digital currencies market does not sustain its recent gains, the result of the Christmas holiday bull run, and is on track to close its worst month since March 2020.
Bitcoin strung together three days of bearish closes after failing above $52,000 and, worse, it gave up short-term support at $47,000 on Wednesday. Bitcoin trades just below this mark and seems determined to test the lower part of its price range, between $45,000 and $52,000, on Thursday. All in all, experts point out that its return in 2021 - at current prices - is more than 60%, although it rose 100% this year, more than double the S&P 500.
Meanwhile, Ethereum gives ground to $3,550, but is up more than 400% in 2021, and Ripple advanced 200% higher so far this year, as did many altcoins, that are finishing the year with returns of more than 1,000%. However, many of these tokens are about to close the month with double-digit declines. In terms of capitalization, it sits below $2.2 trillion.
"With the emergence of Omicron and the stagnant U.S. economy, many macro funds using Bitcoin as this procyclical inflation hedge have decided to take profits throughout December," stated Brian Kelly, CEO and founder of BKCM.
"I can't see any news behind the move, and I suspect year-end book squaring into thin market conditions exaggerated the range," noted Jeffrey Halley, analyst at Oanda. "There is nothing to suggest that Bitcoin's recent $45,000 to $52,000 is under threat" he commented, adding, "Only a daily close above or below those levels' hints that a new directional move is in play."
However, other experts show concern that Bitcoin has failed above $50,000, "because this shows weakness in the current upward trend," stated Naeem Aslam, head of analysis at Avatrade. "If the price continues to trade below this mark, we are likely to visit the early 40K price level again," he noted. Halley, however, added that "only a weekly close below $40,000.00 will have me concerned that another major downside correction is in play."
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