After falling below around $91,000, Bitcoin continued its recovery towards $100,000 in a week due to intense volatility.
The leading cryptocurrency was up 4% last week.
The overall cryptocurrency market cap also bounced back after falling to monthly lows just before New Year’s Eve as liquidity dried up over the holidays.
With traders returning to the market, the total crypto market capitalization has topped $3.55 trillion.
Nevertheless, momentum has still not returned to pre-Christmas levels, with the Crypto Fear and Greed Index currently hovering at neutral levels, reflecting cautious sentiment among investors.
Why did Bitcoin go down?
The main reasons behind Bitcoin’s volatility last week were profit-taking among long-term investors and increased selling pressure from Wall Street, with Bitcoin exchange-traded funds seeing outflows of over $660 million and $387.54 million the week before.
Additionally, the Federal Reserve extreme attitude Added downward pressure.
Last month, the Fed also hinted at a lower rate cut in 2025 than previously thought, with a 25 basis point rate cut.
This is generally bad news for risk assets like Bitcoin as the Fed’s effort to fight inflation pushes Treasury yields higher.
According to some experts, the stock market’s weak performance has also contributed to Bitcoin’s recent struggles.
Analysts at Bravo Research believe that BTC may reflect the weakness currently seen in the stock market.
In September 2024, stocks surged while Bitcoin lagged, but the leading crypto eventually caught up to the strength of equities.
Now, Bravo warns that if shares continue to fall, a similar situation could arise, despite BTC currently being in a parabolic uptrend.
He expects a correction to $80,000 before the rally gains further strength.
Similar projections were made by crypto analyst Pizzino, who predicted that it is unlikely that Bitcoin will retest its all-time high any time soon.
Rather, a break below the $91,750 support level will take the price towards the mid to low $80k levels.
However, like other traders and pundits, he stressed that such corrections are a part of the bullish trend.
Historically, Bitcoin has seen an average correction of around 30% during previous cycles before continuing the bullish market rally.
Bitcoin recovered over the weekend and was close to retesting the $98,000 resistance late Friday, yet some experts advised caution.
According to crypto analyst Ali, Bitcoin should hold steady above $97K to confirm the bullish momentum and signal the end of the current correction.
The cryptocurrency has struggled to maintain this level over the past few weeks.
However, others expect Bitcoin to trade in a range in the coming weeks and expect a decline in its market dominance, which currently stands at more than 55%.
Many traders were of the opinion that if BTC dominance drops to the low 50s, it will trigger the start of alt season.
As of January 3, the Altcoin Season Index was at 50, indicating that the market has not yet shifted in favor of altcoins. Typically, when this metric climbs above 75 the market is considered to be in an alternative season.
Meanwhile, last week saw relatively little activity, with most altcoins showing limited movement.
However, meme coins and AI tokens emerged as the main gainers, managing to register notable gains despite the sluggish performance of the broader market.
The major artists were:
ai16z
Among the top 100 largest crypto assets by market cap, Ai16z (AI16Z) posted the most gains over the past week.
Source: coinmarketcap
The price of AI token increased by 155% in the last 7 days, reaching an all-time high of $2.47 on January 2 and falling back to $2.17 at press time.
Its market cap reached nearly $2.4 billion, making it the first AI token on Solana to cross the $2 billion mark – more than double the $951 million seen at the beginning of the week.
AI16Z gained momentum after it announced plans to roll out an AI Agent Launchpad in Q1 2025 to deploy AI projects developed on the project’s AI operating system called Eliza.
Plans include listing fees, staking mechanisms and liquidity pools for new agents, all aimed at increasing the value for the AI16Z token, which will also serve as the primary currency on the new Launchpad.
Another catalyst fueling the surge is its futures listing on Binance following its listing on Binance Alpha, a pre-listing platform for early-stage projects.
Additionally, whales have started hoarding altcoins, which has increased confidence among retail traders to invest in AI coins, leading to more profits.
fartcoin
Over the past week, FARTCOIN has surged 44.5%, setting a new all-time high of $1.52 at the time of writing.
Its market cap had also crossed $1.5 billion for the first time.
Source: coinmarketcap
The recent surge in FARTCOIN’s value appears to be driven by its exposure on CNBC, an international news outlet with a significant Instagram presence of over 2.7 million followers, which shared a post mentioning the meme coin on the social platform.
Additionally, the price of the meme coin rose by 12.4% over the past day versus the broader meme coin market, driven by anticipation of a more crypto-friendly outlook. under Incoming US President Donald Trump.
athena
Athena (ENA) surged 30% last week, taking its price to $1.2 at the time of publication, while its market capitalization exceeds $3.6 billion.
The altcoin benefited from some market activity over the weekend, as evidenced by its trading volume, which was up 46.8% at the time of writing.
Source: coinmarketcap
ENA gained momentum after Grayscale Research, the research arm of leading asset manager Grayscale, added ENA to its list of 20 assets that, according to them, have the potential for big gains in Q1 2025.
However, the leading driver was crypto exchange Bitgate, which added USDE, Athena Lab’s synthetic dollar-backed stablecoin, as collateral on the platform.
The listing brought new momentum to the altcoin as the community saw it as a notable protocol-related development.
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