On Sunday, December 17, Bitcoin (BTC) is trading at $42 thousand, its price has fallen by 4% since the end of the previous week. Expert and CFO of the ASTL investment project Konstantinas Sizovas analyzed the situation on the market and told how it could change in the coming week.
In the week ending December 17, Bitcoin experienced increased volatility, but for investors this was the expected outcome of the growth spiral that started in the crypto market in October. Important events of the outgoing week were, firstly, the massive liquidation of long positions worth $455 million led to a drop in price to $40,222. Secondly, the publication of inflation data in the United States did not affect the crypto market. At the same time, decisions by the US Federal Reserve and the ECB on interest rates collapsed the dollar, supporting risky assets, including Bitcoin. Well, the rise of the dollar and the correction of the S&P500 index at the end of the week pushed Bitcoin back to $41,605.
Volatility and correction flooded the crypto market amid a two-day meeting of the US Federal Reserve Service (FRS) on the key rate. This is the last Fed meeting in 2023 and it met investors’ expectations. The regulator left the key rate unchanged, but most importantly, hinted at several rate cuts in 2024 amid slowing inflation in the American economy. Overall, Bitcoin has been mostly negative this week, despite a number of favorable macroeconomic factors, such as a weaker dollar. The market is likely still under the influence of recent shocks, and it will take time for a new upward movement to resume.
In the past week, Bitcoin traded in the range from $40,222 to $43,475. On December 11-12, the price dropped to $40,222 amid the massive liquidation of long positions worth $455 million. After a sharp drop, the price consolidated in a narrow range of $40,700 – $42,104. Recovery was observed On December 13 from the European session and accelerated to $43,475 after the US Federal Reserve’s decision on interest rates and the weakening of the dollar. On December 14, the dollar’s decline intensified after the ECB meeting, but Bitcoin was unable to show impressive growth amid risk appetite. The trades closed at around $42,900. On Friday, December 15, Bitcoin trades ended in the red. The BTC/USD pair corrected by 2.51% to $41,940. The crypto market came under pressure due to risk aversion before the weekend. The dollar index recovered to 102.21, while the S&P500 index fell to 4,766.
American statistics were released, and controversial statements were made by US Federal Reserve officials. US industrial production gained 0.2% m/m, compared with a contraction of -0.9%, but fell short of expectations. Data suggests the US economy is in good shape. Chicago Federal Reserve President Austan Goolsbee said Friday that he is not ruling out the possibility of a rate cut at the Fed meeting next March. However, New York Fed President John Williams said it was “premature” to talk about a rate cut at its March meeting, raising the rate on 2-year US Treasuries.
At the time of writing the review, the BTC/USD pair costs $42,305. As data from trading books on crypto exchanges shows, many have placed orders to buy BTC at the level of $40-41 thousand, expecting further growth in the coming month. Thus, a further fall of Bitcoin below $40 thousand seems to be an unlikely scenario. External background and technical analysis indicate favorable conditions for continuing the upward movement on the eve of the Christmas holidays and the New Year. The economic calendar for important events is poor for the new week, so buyers can safely test the strength of the $45 thousand level. According to BitRiver, there is nothing stopping them from raising the price to $50 thousand by the end of the year, taking advantage of the seasonal cyclical factor. However, no positive incentives for sharp growth are expected yet. Cryptocurrency rates are not expected to be significantly impacted by data such as the revised third-quarter US GDP level, existing real estate sales or consumer sentiment. It is unlikely that the publication of the core price index of personal consumption expenditures (Core PCE) in the United States will be a shock. No drastic changes are expected. Most likely, the next week will be quite calm for Bitcoin with an overall upward trend. You can expect a moderate increase in the Bitcoin rate to $45 thousand on the eve of the Christmas holidays, which were often accompanied by growth in the crypto market.
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