Specialists RBC Crypto analyzed the market situation and assessed the prospects for the movement of the Bitcoin exchange rate over the next seven days.
“The background is favorable for buyers”
BitRiver financial analyst Vladislav Antonov
Important events over the week that influenced Bitcoin dynamics:
- At the beginning of the week, pressure on BTC was exerted by the strengthening of the dollar and the consolidation of the US stock market.
- BTC reached a local high of about $39 thousand after Powell’s statements. US Federal Reserve Chairman J. Powell announced the Fed’s intention to suspend rate increases.
- The SEC has issued a request for comment on Fidelity’s application to launch a spot ETF on Ethereum.
This week, Bitcoin was trading in the range of $36,700 – $39,000.
On November 27, the price dropped to $36,707 amid a strengthening dollar, as well as consolidation in the US stock market. On November 28, BTC rose to $38,377 amid an already weakening dollar after comments from Fed spokesman Christopher Waller about a possible slowdown in rate hikes.
On November 29-30, the price consolidated in the range of $37,500 – $38,500. Uncertainty reigned in the market due to conflicting signals from the Fed on future policy regarding interest rates.
On Friday, December 1, at the end of the day, the BTC/USD pair increased by 2.54%, to $38,682. Bitcoin resumed its growth from the opening of the Asian session. During the European session, the price reached $38,833, in the American session – $38,999. Increased volatility in the market was observed after the speech of the head of the US Federal Reserve, J. Powell. His statements provoked a decline in US government bond yields, a fall in the DXY index and a transition in US stock indices to growth. As a result, before the weekend, demand for risky assets increased in all markets.
According to US Federal Reserve Chairman Jerome Powell, discussion about a possible start to easing monetary policy is currently considered premature. He noted that core U.S. inflation continues to run well above the Fed’s target level and announced his intention to keep the benchmark interest rate at current levels at the upcoming meeting in December.
Powell said that the decision to maintain the rate level was made in order to be able to assess the situation in the US economy. He also stressed that the Fed is ready to continue tightening policy if necessary.
The market is pricing in a 55% chance of the Fed cutting benchmark interest rates in March 2024, based on futures prices, according to CME Group.
The BTC/USD pair is very close to the $39 thousand level. It is not important, so buyers can safely move up to the next psychological level of $40 thousand. If the growth rate of quotes continues, this level will be reached by the end of Sunday, and the target zone of $42 thousand will reach lunchtime on Wednesday (December 6).
The external background for buyers is still favorable. According to my calculations, the growth phase began on November 21 and will last until January 8. According to BitRiver forecasts, taking into account small corrections, by January 8 the price should test the level of $42,200, and in case of favorable news on the ETF – $45,000.
Thus, this week Bitcoin continued its recovery, strengthening to $39 thousand. The key factor of the week was the statement by the head of the US Federal Reserve about his intention to suspend the policy tightening cycle at the next meeting. This supported demand for risky assets, including Bitcoin. The technical picture also remains favorable for reaching new price levels.
“Bitcoin is in the power of bulls”
Regional Director of the CommEX exchange in Russia and the CIS Anton Toroptsev
Since November 28, Bitcoin has been in the grip of bulls, but not so strong that we can confidently talk about the start of a powerful bull rally. Over the week, the Bitcoin rate showed several sharp jumps: first, on November 28, the cryptocurrency rose in price to $38,180, then after a couple of days of correction, Bitcoin rose to $38,800, but could not gain a foothold at this level. After a pullback to $38,300 on the night of December 2, Bitcoin came close to $39 thousand.
The Bitcoin exchange rate is influenced by two categories of factors: macroeconomic, such as the state of the American economy and decisions of the Federal Reserve, and intramarket, relating to the cryptocurrency market and its prospects. Both of these factors are now playing into the hands of Bitcoin, jointly pushing its price to overcome the psychological mark of $40 thousand.
Market participants, both cryptocurrency and stock market, are encouraged by signals about a decrease in inflation rates in the United States. On November 30, the US Department of Labor published data on consumer expenditures (PCE), which in October grew by only 0.2% month-on-month. The overall inflation rate over the past 12 months was 3%. This is still above the 2% target that the US Federal Reserve is aiming for, but at the same time it is the lowest US inflation rate since 2021. The slowdown in inflation gives investors hope that the Fed will gradually move to lower the key rate, which will entail an increase in risky assets, which include stocks and cryptocurrencies.
Their hopes were confirmed after the speech of US Federal Reserve Chairman Jerome Powell. On December 1, he, as usual, veiledly hinted at the possibility of a quick reduction in the key rate, without rejecting its increase if the US economy required it. Core inflation on an annualized basis has fallen to 2.5% over the past six months, Powell said. Following this news, trading on the US stock market, which has been growing for the fifth week in a row, also closed in positive territory.
The week that begins on December 4 is expected to be fairly quiet in terms of the publication of economic indicators. The US will release data on employment and unemployment, the trade deficit for October and the business activity index (PMI) in the services sector. The main expectations of market participants are now focused on the US Federal Reserve meeting, which will take place on December 12 and 13.
Based on these optimistic expectations, Bitcoin could test the $40,000 level next week and has a chance of consolidating at this level. If he succeeds, then the next resistance level for Bitcoin will be $43 thousand. The cryptocurrency may rise to this level by the end of next week on the eve of the US Federal Reserve meeting.
It’s funny that those who take long positions in Bitcoin benefit from both the slowdown in inflation and its still quite high level. Bitcoin is seen as both a risk asset, in which it has similarities with stocks, and a safe haven, like gold, which is now also rising against the backdrop of ongoing economic uncertainty and recession risks.
Intra-market factors also have a positive effect on the Bitcoin rate – the expectation of approval of the Bitcoin ETF by the US Securities and Exchange Commission (SEC) and the general rise in the mood of crypto investors associated with the upcoming halving.
The upward dynamics in the first week of December seems to be a more likely scenario than a rollback of Bitcoin to $35-36 thousand. The optimism of crypto investors is also evidenced by the fear and greed index (FGI), which by December 2 rose to 74 points out of 100 possible. For comparison: at the beginning of September the indicator was at the level of 40 points. This suggests that the upward trend will continue in the next two weeks.
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