Bitcoin and other cryptocurrencies experienced a slight retreat on Monday, pulling back from their 20-month highs. Despite the dip, prices still remain close to the peak of a recent rally. As we look ahead, there are catalysts on the horizon, including the next Federal Reserve decision, which could potentially reignite sentiment in the market.
Over the past 24 hours, the price of Bitcoin has fallen by 3% to $42,350. This decline comes after reaching levels near $44,500 on Friday, representing the highest point for the largest digital asset since early April 2022. It’s worth noting that this peak was followed by a significant bear market for tokens. However, Bitcoin has shown remarkable strength by surging two-thirds in just two months. This impressive growth has put an end to a prolonged period of subdued trading and has sparked discussions about a potential new crypto bull market.
According to Alex Kuptsikevich, an analyst at broker FxPro, there was a wave of profit-taking in the cryptocurrency market on Monday morning. Many traders exited their long positions in low liquidity before the regular session in Asia. Despite this activity, there is still strong demand for risk assets in traditional markets. This suggests that the market will attempt to regain its previous growth trajectory.
Kuptsikevich asserts that this dip does not indicate a break in the bullish trend. In fact, he believes that the trend will remain intact as long as Bitcoin can hold above $40,000.
In summary, while Bitcoin and other cryptocurrencies have slipped slightly from their recent highs, the overall outlook remains positive. The upcoming Federal Reserve decision and ongoing demand for risk assets could potentially fuel further growth in the market.
Multiple factors have supported gains in crypto prices, including optimism that U.S. regulators will soon approve the first spot Bitcoin exchange-traded fund (ETF), which would be expected to usher in a fresh wave of investor interest. The improving macroeconomic backdrop—with expectations that the Fed will cut interest rates multiple times next year—and historically tight token supply also have helped.
Macro Tailwinds for Bitcoin
Like the Dow Jones Industrial Average and S&P 500, Bitcoin has benefited from macro tailwinds as waning inflation and slowing growth support the prospect of rates coming down significantly next year from a generational peak. That’s why the latest Fed monetary policy meeting this week, on Tuesday and Wednesday, looms large.
Rate-Cut Timing
While markets don’t expect the central bank to lower borrowing costs this month, the press conference from Fed Chairman Jerome Powell will be scrutinized for signs of rate-cut timing, with traders currently pricing in the first cut as soon as March. Any dovish commentary from Powell, or indications that rates could be lowered sooner rather than later, has the potential to restart the crypto rally in the absence of other major catalysts such as spot Bitcoin ETF news.
Cryptocurrency Market Update
Bitcoin and Ether Prices Experience a Dip
In the volatile world of cryptocurrencies, Bitcoin has witnessed a slight decline in its value. The prices of Bitcoin fell by 2%, resting below $35,000. Following suit, Ether, the second-largest cryptocurrency, experienced a similar downward trend, with a 4% drop, taking its price below $2,250.
Altcoins Reflect the Fall
Alongside the major cryptocurrencies, altcoins have also shown signs of weakness in the market. Cardano, one of the prominent altcoins, witnessed a decrease of 6.8% in its value, while Polygon experienced a 4% decline.
Memecoins Take a Hit
In addition to the larger cryptocurrencies and altcoins, memecoins have also faced a decrease in their worth. Dogecoin, a renowned memecoin, encountered a 2% drop, while Shiba Inu experienced a significant decline of 4%.
This adjustment in prices reflects the highly volatile nature of the cryptocurrency market. Investors must remain vigilant and adaptable to navigate these fluctuations.