The start of a new week in the realm of risk has seen a shift in sentiment, with whale selling indicating a change in the mood surrounding Bitcoin.
As the latest week concludes, there is little solace for apprehensive traders amidst the ongoing "up only" trend in Bitcoin price action. With a mere two weeks remaining in the annual candle, the pressure on risk assets has begun to intensify, propelled by upcoming macroeconomic data and market digestion of last week's Federal Reserve moves. Notably, the elusive "Santa Claus rallies" for Bitcoin appear to be increasingly rare at present, with hopes now centered on the potential approval of a spot exchange-traded fund (ETF) next month, although high fees have left holders discontented.
Nevertheless, there is a potential silver lining in market sentiment within and outside the cryptocurrency sphere. While the situation is characterized by greed, it does not seem to exhibit unsustainable conditions, offering room for possible gains amid prevailing uncertainties. The recent weekly close for Bitcoin on December 17 stood around $41,300, amid a local sell-off in BTC/USD.
The decline persisted overnight, witnessing Bitcoin touching $40,800 before rebounding to slightly above $41,000 during the Asian trading session, as per data. Traders and analysts, already cautious based on recent Bitcoin price behavior, remain vigilant.
"Charts don’t lie," affirmed trading resource Material Indicators at the onset of a post on X (formerly Twitter) that day. Material Indicators observed that Bitcoin had crossed below its 21-day moving average entering the new week—a development it termed "bearish in nature."
"Year-end profit-taking and tax-loss harvesting are expected to prevail in the near term," it further remarked. Co-founder Keith Alan highlighted the ongoing struggle for key Fibonacci retracement levels, equating to the November 2021 all-time high. Additionally, popular trader Skew added technical levels for 1W/1M, signaling potential support and resistance areas.
In the upcoming week, the release of the Fed's preferred inflation gauge, the personal consumption expenditures (PCE) index for November, will set the tone for U.S. macroeconomic events. While the next Federal Open Market Committee (FOMC) meeting for interest rate decisions is slated for late January, expectations of a rate adjustment have persisted since last week's developments. Uncertainty remains prevalent even as stock markets rise, as outlined by trading resource Kobeissi Letter previewing the upcoming week.
Moreover, a strengthened U.S. dollar, which had dipped to multi-month lows during the FOMC meeting, may offer new momentum to the cryptocurrency market. The ongoing heated debate surrounding Bitcoin transaction fees has intensified recently, with fees reaching highs not seen since April 2021. Despite this, fees have notably declined heading into the new week, sparking discussions among market participants about the pending decision to approve the first U.S. spot Bitcoin ETFs.
Amidst the ongoing debates and fee fluctuations, the growth of the Bitcoin network has paused in December, reflected in the decline in the number of new BTC addresses entering transactions. The slowdown in network growth has raised concerns about Bitcoin's sustainability above $44,000, emphasizing the need for increased new address activity to support the ongoing bullish momentum.
The prevailing sentiment among cryptocurrency market participants, as per the Crypto Fear & Greed Index, remains in the "greed" zone, though nearing levels seen nearly a month ago. However, it is noteworthy that an index score exceeding 90/100 typically signifies a long-term market peak, indicating a state of irrational exuberance among participants.
Meanwhile, traditional market indexes' current sentiment indicates an inclination toward an extended Federal Reserve tightening cycle that began in late 2021, according to Caleb Franzen, a senior analyst at Cubic Analytics.
