Bitcoin moved closer to the $17,000 level on Tuesday. The digital currency fell to $16,400, its lowest level in the past three weeks. As the end of the year approaches, BTC may experience high volatility and low liquidity.
Bitcoin reached a short rise
Bitcoin surged to a short-lived high of $16,837 in today’s session, barely 24 hours after hitting $16,398. The cryptocurrency saw an impulsive decline after a significant resistance-level rejection.
The sharp decline has been linked to an outright daily drop in the S&P 500 and general nervousness about the Federal Reserve’s potential to raise interest rates.
BTC/USD trades at $16,870 on the daily chart. Source: TradingView
BTC could fall more at the end of the year given the drop in trading volume and liquidity. This would lead to a spike in the asset’s volatility.
Katie Stockton, the founder of Fairlead Strategies LLC, has predicted that BTC could retest the November lows and drop “almost $15,600” in the coming weeks.
BTC reached an all-time high of $68,997 on November 8, 2021. But the major crypto caused a major shift in the market structure by producing a lower low on the weekly time frame at $32,995 on January 24. This move confirmed the beginning of a bear market.
Possible rally for BTC
As the dust settles from the FTX crash and FUD surrounding Binance, bitcoin price could begin to see a gradual recovery over the coming months. According to Jim Wyckoff, “Neither the bulls nor the bears have any short-term technical advantage.”
This suggests that traders will “continue to see more choppy and sideways trading on the daily chart until the end of the year – barring a major fundamental shock to the market,” Wyckoff concluded.
However, one tweet from Crypto Trader, PlanB shows that the next Bitcoin halving will take place in 15 months. The price hike will not happen for at least 5 months as the US FED will continue to tighten monetary policy. BTC price will have room to breathe as macroeconomic conditions ease.
Schroders, a global asset management firm, stated that risky assets like Bitcoin have an almost 80% chance of ending the year with a positive return.
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The investment firm noted that December was its best-performing month in collecting data on U.S. large-cap stocks since 1926. Schroders estimates there is a 77.9% chance that large-cap stocks will end December with a net gain. The company divides all percentage gains versus all percentage losses over the course of a month to arrive at these metrics.
Investors should note that the correlation between Bitcoin and the stock market has exceeded 90% this year. It could be argued that the peer-to-peer digital currency will continue to reflect price changes in the stock market until the end of the year.
Bitcoin is down 2% from its December opening price of $17,167. So, according to Schroders’ analysis, Bitcoin could rise by 3.5% to reach $17,550 on January 1, 2023.
Featured image from Unsplash.com, charts from TradingView.com