The weekend did not bode well for Bitcoin and altcoins. Bitcoin trades just below $96,000, with most cryptocurrencies still recovering from losses. The ongoing market downtrend over the week has pushed Bitcoin to four-digit levels, creating a deeper bottom.
Bitcoin (BTC) Overview
Recent whale sales and ETF outflows, compounded by a disappointing December rate cut, prompted individual investors to reduce their holdings. According to the Coinbase Premium, U.S.-based investors are experiencing one of their least optimistic periods. The fear index hovers at rare levels, and historical data suggests further declines could be forthcoming.
On Friday, Bitcoin ETFs saw $492 million in outflows. BlackRock was responsible for nearly all these withdrawals. A near $1.8 billion net outflow was recorded during a three-day period from November 12-14.
Although the end of a government shutdown led to inflows of half a million dollars early in the week, expectations for consistent rate cuts were disrupted due to potential data delays and ambiguous Fed Member signals for December’s meeting. While the decline appears to have steadied, the direction of rate policies based on upcoming economic data is the last hope for cryptocurrency investors.
In April and May, $94,000 was a favorable support for Bitcoin. It seems plausible that Bitcoin might consolidate in this range again, with a potential recovery towards $102,800.
Implications for Altcoins
Despite the challenges, if Bitcoin remains steady and allows room for altcoins to grow, a return to higher levels could bring positive outcomes for other cryptocurrencies. Frequent declines in Bitcoin have forced most cryptocurrencies into deeper bottoms. Bitcoin needs to avoid these deep bottoms and make way for recovery.
In the short term, significant gains for Ethereum or other major cryptocurrencies seem unlikely. Unless Bitcoin holds its current range and prevents declines to $85,000, talks of a December rate decision and Supreme Court tariff worries could materialize into real fears, reversing the charts.
Cryptocurrencies have the innate ability to overprice upcoming risks and positive developments. Fear is currently overpriced. Following historically overpriced fears, significant rallies have ensued, suggesting a delayed altcoin bull market could thrive on such grounds. Still, the future remains unpredictable.