Bitcoin and Other Cryptocurrencies Experience Setback after Recent Rally

by webmaster

Cryptocurrencies, including Bitcoin, have seen a slight decline as traders begin to take profits following a recent surge in digital assets. While there is still the potential for further price drops, cryptocurrencies continue to benefit from various factors.

Over the past 24 hours, the price of Bitcoin has fallen by 2% to below $41,000. This marks its lowest level in two weeks and a retreat from the recent highs above $44,000 that were achieved just 20 months ago. Despite this setback, Bitcoin has managed to rally by approximately 50% within a two-month period. This has led to talks of a new crypto bull market, ending a prolonged period of subdued trading.

Anthony Rousseau, Head of Brokerage Solutions at TradeStation, believes that the market structure for Bitcoin remains strong, especially with a peak close to $45,000. He suggests that it is healthy for Bitcoin to take a breather and establish a new trading range. Rousseau even goes as far as stating that we may be on the cusp of a strong year in 2024.

Crypto enthusiasts remain optimistic about further gains as evidenced by activities in the options market. Many are still betting that Bitcoin will reach $50,000 in the coming weeks.

There are several positive factors that have contributed to the success of digital assets. One such factor is the expectation that U.S. regulators will soon approve the first spot Bitcoin exchange-traded fund (ETF). This approval would likely bring about a fresh wave of investor interest. Additionally, the historical scarcity of tokens and the current macroeconomic landscape have played a role. Bitcoin has been rallying alongside the Dow Jones Industrial Average and S&P 500, fueled by hopes that the Federal Reserve will reduce interest rates multiple times next year.

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Signs of Profit-Taking in Crypto Market

There are indications that some crypto traders are starting to cash in on their investments, although Bitcoin’s token supply is still largely held by long-term investors. CoinShares, a digital asset manager, reported that digital asset investment products experienced outflows of $16 million this week. These outflows, which were primarily from Bitcoin products and observed in various regions, are believed to be attributed to profit-taking rather than a change in sentiment towards the asset class.

As profit-taking continues to exert selling pressure, the technical market conditions for Bitcoin are becoming weaker, leaving prices susceptible to further decline.

Analyst Alex Kuptsikevich from broker FxPro suggests that the recent pullback may be a result of investors capitalizing on the significant gains made since October. If the market falls below $40,000, it could potentially see a pullback to around $38,000. However, this correction is likely just a part of a larger bullish cycle for Bitcoin.

In addition to Bitcoin’s decline, other cryptocurrencies also experienced losses. Ether, the second-largest crypto, dropped 4% to $2,130. Altcoins such as Cardano saw a 7% decrease, while Polygon plunged 8%. Memecoins also suffered losses, with Dogecoin experiencing a 7% drop and Shiba Inu shedding 9%.

These developments in the crypto market highlight the need for investors to remain vigilant and adapt to the changing dynamics of the industry.

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