- The main narrative boosting Bitcoin prices in recent months has been the optimism that U.S. regulators will soon approve the first spot Bitcoin exchange-traded fund (ETF).
- Tuesday’s focus will be on the United States’ Consumer Price Index (CPI) inflation data for November.
- Beyond Bitcoin, Ether, the second-largest cryptocurrency, retraced to $2,230 with a drop of less than 1%. Smaller tokens or altcoins experienced a more robust recovery.
Bitcoin and cryptocurrencies recovered from the sales pressure they experienced on Monday and became active again: What path will be followed from now on?
Bitcoin Recovered from the Pressure It Experienced on Monday
Bitcoin and cryptocurrencies bounced back from the worst crypto selloff of the year on Tuesday, following a period of stabilization, yet digital assets continue to maintain gains from the recent rally, pushing prices to the highest levels since April 2022.
Bitcoin’s price dipped to $41,850, down by less than 1% in the last 24 hours, briefly trading below $41,000 during a short period, marking the worst daily selloff for the token since early March.
Bitcoin retraced from its recent peak above $44,000, the highest since April 2022, but still surged over 50% in the last two months in the latest stage of this year’s crypto recovery, sparking calls for a new bull market.
“Bitcoin pulled back on Monday, but it hasn’t affected our short-term trend-following indicators yet; these indicators are still pointing higher,” said Katie Stockton, partner at technical research firm Fairlead Strategies.
The main narrative boosting Bitcoin prices in recent months has been the optimism that U.S. regulators will soon approve the first spot Bitcoin exchange-traded fund (ETF), which is expected to bring a new wave of investor interest.
The evolving macroeconomic outlook has also been helpful, particularly signs of rising inflation and slowing growth in recent times, increasing expectations that the Fed could cut interest rates several times next year. High-interest rates since 2022 have pressured other risky bets like tokens and stocks, and hopes of soon-to-be lower interest costs represent a significant tailwind for both asset classes.
Focus on U.S. Inflation Data!
Tuesday’s focus will be on the United States’ Consumer Price Index (CPI) inflation data for November. This data can impact cryptocurrencies, as well as the stock markets, such as the Dow Jones Industrial Average and the S&P 500. The inflation reading could alter current expectations for the first possible interest rate cut in March next year before the Fed’s upcoming monetary policy decision.
From a technical market perspective, analysts see little impact on the bullish narrative behind Bitcoin’s recent drop, some attributing it to profit-taking, as momentum still appears to be behind crypto prices.
Stockton continued: “If Bitcoin can complete a move above resistance around $42,200, it will confirm another breakout. When confirmed, a breakout could place the next resistance around $48,600. The medium-term momentum remains strongly positive, indicating that overbought conditions can be sustained without a major pullback in the coming weeks. The initial support level for Bitcoin is around $37,400, near the rising 50-day moving average.”
Beyond Bitcoin, Ether, the second-largest cryptocurrency, retraced to $2,230 with a drop of less than 1%. Smaller tokens or altcoins experienced a more robust recovery, with Cardano showing a 6% increase, and Polygon rising by 2%.
