On Wednesday, the cryptocurrency market awaits the US Federal Reserve’s decision on interest rates later today, which means that Bitcoin (BTC) is experiencing some loss in value at the moment.
This follows a wave of bullishness in BTC that briefly sent it above $108,353 on Tuesday before ending the day with a doji candle, a signal that traders were unsure what to do with the price action.
Technical indicators have them watching the market closely, and the Moving Average Convergence Divergence (MACD) early on indicates bearish divergence. The latter suggests weakening bullish momentum and hinders the path to Bitcoin’s near-term price trajectory.
The Federal Reserve is seen as readying a 25 basis points (bps) rate cut, bringing down the cumulative amount of reductions to 100 bps since September. The steady economic data, along with incremental progress in the monetary policy adjustments, are resulting in speculation of a possible pause in rate cuts by Q1 2025, according to a K33 report, which also claims that the market is considering that there may not very many additional adjustments in the monetary policy.
If these projections come true, treasury yields and the US dollar could rise. That might make Bitcoin less appealing to investors seeking to diversify their portfolios with crypto.
Santa Rally Conditions Take Shape
Despite the macroeconomic caution, analysts at K33 continue to be optimistic that Bitcoin will see a potential “Santa rally” in the coming weeks. Focusing on a ‘macro vacuum,’ due to the absence of major economic data releases through the end of the year, they point to a September ‘flat’ meeting.
“With solidifying market conditions, aggressive Bitcoin accumulation by MicroStrategy’s Michael Saylor, and momentum building ahead of Trump’s inauguration, BTC appears poised to end the year on a strong note,” stated a K33 analyst.
ETF Performance Signals Long-Term Interest
CryptoQuant founder Ki Young Ju noted something interesting about Bitcoin’s institutional adoption. He also said on Wednesday that BlackRock’s Bitcoin (Bitcoin) spot Exchange Traded Fund (ETF) has doubled the Asset Management Under Asset (AUM) of its Gold ETF (ETF) in a year. In contrast, BlackRock’s Gold ETF only took 20 years to grow to $33 billion in AUM.
This rapid growth reinforces an increasing investor preference for Bitcoin as a long-term store of value and its entry into institutional portfolios.
All roads lead to the Fed decision, but favorable macro conditions are conducive to a year-end rally, which links the bears yet to come to macroeconomic conditions and investor sentiment.
Strategic Bitcoin Reserve Proposal Adds Bullish Momentum to BTC Outlook
On Wednesday, Bitcoin caught a fresh bullish narrative as conversations revolved around a ‘Strategic Bitcoin Reserve.’ According to Bitcoin Magazine, the Bitcoin Policy Institute posted on Twitter a draft of an executive order calling for a Strategic Bitcoin Reserve, which is waiting for President Trump’s signature.
The possibility of the national Bitcoin reserve solidifies Bitcoin’s long-term value and its ascension towards becoming a key financial asset. This fuelled optimism in the market, and Bitcoin Magazine stated that America’s Strategic Bitcoin Reserve is real.
QCP Capital expressed a largely optimistic view of Bitcoin’s spot price performance in its weekly report. The report read: “It’s becoming harder and harder to find reasons to be bearish on Bitcoin’s spot price when considering its confluence of macroeconomic factors, institutional adoption, and favorable policy narrative that continue to fuel Bitcoin’s ongoing rally.”
But, despite the bullish sentiment, the Bitcoin traders at QCP Capital are still sounding the alarm for caution. Despite Bitcoin spot prices hitting new highs, the report noted this persistent skew in the options market, where puts were trading more aggressively than calls. This trend suggests that market participants are increasingly leaning toward hedging strategies instead of viciously pursuing the rally, perhaps in the light of apprehension in the market.
Short-term caution hangs alongside a long-term favorable view of the industry, with potential for a Strategic Bitcoin Reserve and the coin’s recent resilience against market volatility.
Bitcoin Price Analysis: BTC Hits $108K Before Signs of Weakness Emerge
Tuesday’s rally for Bitcoin (BTC) meant that the #1 cryptocurrency went as high as $108,353. Still, the daily candlestick sealed the day out with a doji pattern, a common indicator of uncertainty in the market. BTC had pulled back by Wednesday, dipping below $104,100.
If Bitcoin sustains a fall through the $101,109 daily support, further correction may follow, falling to Bitcoin’s next crucial support at $90,000, according to market analysts.
The cautious sentiment also has something to do with technical indicators. The Relative Strength Index (RSI) was turned down after failing to stay positive above 70, now at 64. An additional drop through the neutral level at 50 could accelerate the bearish tide, driving the price of BTC lower more severely.
However, the Moving Average Convergence Divergence (MACD) indicator simultaneously signals a rising risk of a bearish crossover. If the MACD line drops below the signal line, the signal would be a sell signal, reaffirming declining momentum.
These key technical levels closely watch the recent rally in Bitcoin, which will test the asset’s resilience.
Bitcoin Could Target $119,510 If Rally Resumes
If Bitcoin succeeds in breaking the all-time high at $108,353, its bullish momentum will regain strength on the upside. This level is likely a decisive close above, extending the rally as BTC aims towards $119,510 as the next major resistance.
The 141.4% Fibonacci extension from the $66,835 low of November 4 to the $104,088 high of December 5 is this target and aligns with the 141.4% Fibonacci extension. This move would confirm that the bulls are still in charge and could draw some buying interest due to the traders anticipating new highs for Bitcoin’s price.
Market participants will closely watch this key level, using it to assess whether Bitcoin can sustain its upward trend and set new records.
Ethereum Slips 3% Amid Optimism for RWA Tokenization and Whale Accumulation
On Tuesday, it remains to be seen if Ethereum’s (ETH) recent 3% decline is due to growing optimism over real-world asset (RWA) tokenization or if it results from the altcoin’s volatile nature. Meanwhile, data shows that large investors have steadily added to their ETH holdings over the past month, indicating a long-term belief in the coin’s potential.
Ethereum is expected to be the first casualty but the most profitable of the RWA tokenization trend, as highlighted in a recent memo from Juan Leon, Bitwise’s Senior Investment Strategist. Leon said that in 2025, tokenized assets could become a defining theme, and Ethereum will be in the middle of it all.
This trend is already being underlined by high-profile projects. The BUIDL tokenized Treasury fund has been snapped up by BlackRock, which manages a staggering $578 million in total. Platforms with an RWA focus, such as Ondo Finance, have already gained over $600 million in total value locked (TVL). According to Bitwise, if the $100 trillion RWA market switches to on-chain transactions, Ethereum could charge over $100 billion in annual fees.
As per on-chain data from Santiment, Ethereum’s largest holders are sticking to their guns. 57 percent of the total circulating supply is now held as key wallets have taken custody of over 100,000 ETH; this implies strong investor anticipation for a bullish market shift. These holdings include DeFi and staking wallets, which imply many investors intend to keep their assets locked up instead of selling them.
🐳 There are currently 104 whale wallets holding at least 100K Ethereum. Their combined holdings currently sit at 57.35% of all existing ETH tokens, currently worth ~$333.1B.
Meanwhile, wallets with 100-100K hold their lowest ratio of supply in history, 33.46%. And sub-100 ETH… pic.twitter.com/9qDN3lotQy
— Santiment (@santimentfeed) December 17, 2024
Another indication of its faith is that for the 16th day in a row, Ethereum exchange-traded funds (ETFs) recorded net asset flows of $51.1 million, according to data from Coinglass on Monday. Despite the current market downturn, Ethereum is gaining growing institutional interest, as evidenced by this sustained streak of investments.
Nevertheless, while Ethereum’s price wavers temporarily, the narrative of utility and investor confidence in the medium term grows around Ethereum as a key player in the emerging RWA ecosystem.
Ethereum Price Analysis: ETH Eyes $4,380 Rally If Key Resistance Holds
Over the last 24 hours, Ethereum (ETH) fell by 3%, with liquidations of $48.82 million recorded. Long positions comprised $40.66 million of these liquidations, and short positions $8.16 million.
Key Resistance and Support Levels to Watch
The past week, ETH has been consolidating within a rectangular channel and has been unable to push above its yearly high resistance at $4,093. Above this critical level, the price could have a sustained close, carrying the price to $4,380. The other way would be if support fails to hold near $3,820, sending the price to the next key level at $3,550.
Mixed market sentiment remains the case with current technical indicators. Relative Strength Index (RSI) has been crossed down under neutral too, which means weakness in bullish momentum. Still, the Stochastic Oscillator is oversold, a region that marks swift price recoveries on the hourly chart in the past.
What’s Next for Ethereum?
A breakdown of $3,550 a day would invalidate the bullish thesis and presage further downside. ETH will still need to break out of $4,093 and reestablish positive momentum to set on course for a rally towards $4,380. The coming days are expected to provide clearer direction, but traders should keep an eye on these levels.
