The cryptocurrency market has recently been abuzz with Bitcoin's (BTC) rally and subsequent fluctuation, with the digital asset showing signs of both resilience and volatility. Last week, BTC surged past the $44,000 mark, only to face a strong resistance near $45,000, which led to a slight retreat. Despite this, the recent progress in spot Bitcoin exchange-traded fund (ETF) filings has injected optimism into the market, with analysts speculating that Bitcoin might soon achieve the $45,000 target.
Bitcoin concluded the previous week at approximately $41,400, reflecting a 5.5% decline from its closing value of around $43,800 the week before. The digital currency continued its descent on Monday, dipping to a weekly low of about $40,425. This downturn halted Bitcoin's eight-week streak of price appreciation, with an estimated $345 million in long and short positions liquidated in the past week. Matteo Greco, a research analyst at digital asset and fintech investment firm Fineqia International, highlighted that "high volatility is a typical outcome following significant uptrends and downtrends," which often leads to a reduction in market leverage and a more sustainable market environment.
Interestingly, Bitcoin's dominance witnessed a minor decrease from 53.46% to 53.11% last week, signifying the resilience of altcoins compared to the leading cryptocurrency during the recent downtrend. Greco noted that this pattern usually emerges when investors actively shift capital among various altcoins in pursuit of short-term profitability. Despite this, the daily volume on centralized cryptocurrency exchange platforms showed a $36 billion surplus, the highest level recorded since March 2023, indicating robust trading activity contributing to the increased volatility.
The crypto community eagerly awaits the U.S. Securities and Exchange Commission's (SEC) decision on Bitcoin ETF applications. Greco mentioned that the final deadline for the SEC's decision on the 21Shares BTC Spot Filing is scheduled for January 10, with a high probability of approval anticipated. This decision could trigger a series of approvals or rejections for other BTC filings. Recently, spot Bitcoin ETF applicants made significant amendments to their registrations, bolstering market sentiment and aiding Bitcoin's recovery above the $43,000 level.
Santiment, an on-chain analytics firm, pointed out that Tuesday's crypto rally seemed to be a response to traders' fear or fatigue, which began last Friday. According to Santiment, "In the latest case of 'traders get fearful, market prices get cheerful,' #crypto market caps rebounded big on Monday." They further noted that negative sentiment around Bitcoin often signals a shift from smaller wallets selling to larger ones, thereby increasing the chances of a price rebound.
Bitcoin is now poised to approach the Fair Value Gap between $44,730 and $45,369. Once this gap is filled, the market may anticipate another drop or price correction. As of early Tuesday morning, Bitcoin was trading in the green zone at $43,004.63, with a 24-hour trading volume increase of 24.97% at $24,951,025,652. This recent price action represents a 5.05% increase in its value over the past 24 hours and a 2.86% gain over the last seven days.
With Bitcoin's circulating supply standing at 19.57 million BTC and a market cap of $24,951,025,652, the cryptocurrency market remains vigilant, closely monitoring Bitcoin's trajectory and the potential impact of the SEC's imminent decisions on ETF filings.
