Bitcoin Prices Hold Tight above $20K Level, But Downsides Still Imminent

Bitcoin and other cryptocurrencies have consolidated gains from a recent rally which catapulted digital assets a step higher than a monthly.

The Bitcoin price has not moved in 24 hours. It is currently hovering around $20,290 according to the latest data. TradingView. Ether, the largest cryptocurrency, rose 1% to $1.519.19 while altcoins like Cardano and Solana were just above flat. Meme coins are buoyant with Dogecoin rising 13% and Shiba Inu increasing 4%.

At 10:10 in Hong Kong Time, Bitcoin was trading at $20.394; this is a drop of more than 2% during the intraday. Ethereum, however, fell 2.7% to $1520.

Although the short-term picture appears solid, cryptos are still susceptible to another lower swing.

Bitcoin reclaimed its key price point on Tuesday afternoon, which is $20,000, triggered by weaker US dollars and accelerated by a wave of short-sellers—traders who bet against the cryptocurrency—being forced to cover their losses and purchase the token.

Source: TradingView

Although the crypto seems to be in the $19,000 area, it has occasionally moved beyond that threshold in recent weeks. Whether the token’s value will continue to increase is a matter of people’s guesses.

While most crypto users are optimistic that Bitcoin has established its bottom after this year’s brutal market downturn, digital assets are still vulnerable because of the Fed’s monetary policy decision and negative sentiment in broader markets.

A looming catalyst for markets is the Fed’s tightening of financial conditions, including what is expected to be the fourth largest interest-rate hike, next week. Analysts anticipate that the Fed’s announcement next week could send Bitcoin trade below the $18,000 level.

Bitcoin’s vulnerability comes from a series of bad economic news, such as inflation data, among others, which have been turning market sentiment to the downside over several months in the recent past.  Despite Bitcoin’s price recovery since May 2018, the crypto has done better than any other assets like stocks, gold, European Euro, Japanese Euro, Japanese Yuan, Chinese Yuan and British Pound.

Over the previous month, Bitcoin’s recent resilience, compared to other assets, could be due to the crypto becoming a great conduit for U.S. dollars in nations that are struggling with their own currencies. Or Bitcoin’s resiliency could be anchored on long-term crypto investors who have remained unfazed amid recent plunges in the U.S. economy.

Bitcoin is stable, but it isn’t out of the woods yet. The end of the year is packed with macro events that could shift the tides downwards, including the midterm election, inflation reports, Federal Reserve meetings, the effects of Russia’s invasion of Ukraine, and a potential peak in U.S. dollar strength.

Source: Shutterstock

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