Bitcoin holds $56,000 but fails as a risk hedge against Omicron

By Noemi Jansana / Alejandra Zamora

Date: Thursday 02 Dec 2021

Bitcoin holds $56,000 but fails as a risk hedge against Omicron

(Sharecast News) - Bitcoin remains in the trading range it was encapsulated in this week, with support around $55,500 - $56,000, while resistance is at $60,000. The queen of the 'cryptos' lived through a day on Wednesday that is almost a carbon copy of the previous one, with limited rises above $59,000 and moderate sales caused by the headlines coming from the US.
As for the 'altcoins', Ethereum broke its winning streak of four consecutive sessions with moderate declines that continued on Thursday. However, the $4,500 holds for the number two crypto by market value, while the rest of the 'altcoins' also fall and the total capitalization stands at $2.6 trillion.

The appearance of Federal Reserve Chairman, Jerome Powell, on Tuesday, prevented the rally, with statements that the reduction of stimuli will be carried out at a faster pace than expected. Meanwhile, on Wednesday, the first Omicron contagion in the US swept away any bullish attempt. Analysts point out that the cryptoasset's behavior resembles that of a risk asset, rather than a hedge, in the latest derivative of the virus, as the news triggered another flight to safe havens, such as the dollar or gold.

"Just like other assets in the same bracket, (Bitcoin) remains vulnerable to the continual shifts in sentiment as information slowly appears," stated Craig Erlam, an analyst at Oanda. "We seem to be jumping from good news to bad news and back again on a daily basis which perhaps doesn't bode well for Thursday. Although at this stage and after such a pullback in risk assets, no news may also bring some temporary relief," he added.

However, some experts remain optimistic, believing that, "while the new coronavirus variant has raised concerns over potentially tumbling down crypto prices, it is also essential to note that crypto markets had observed strong growth throughout (the pandemic)," noted Danny Chong, co-founder of Tranchess, to 'CoinDesk'.

Some analysts remain confident that the storm clouds around Bitcoin will eventually disappear and that the bulls will return to the helm of the cryptocurrency par excellence, obeying seasonal patterns, as December is usually a good month for the cryptoasset. For this group, $70,000 remains the target to conquer.

The Bitcoin Fear and Greed Index entered "extreme fear" territory during last week's sell-off. The index is at the lowest level since late September, which preceded a rebound in the Bitcoin price. Technical indicators are also starting to move up from oversold levels as price pullbacks remain limited.

"We are in a most interesting market moment. If there is a time to jump into the Bitcoin pool, it is right now, in the middle of a support zone," explained José María Rodríguez, analyst at Bolsamanía. That said, he advised "a stop loss at closing prices below $53,000". "Above $60,000 would confirm a turnaround with a target at the all-time highs ($69,355) and above.... $100,000? Anything is possible for Bitcoin," he concluded.


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