Bitcoin violently retraced after breaking $44,000, will it surge again?

Ritu13

The cryptocurrency market has become one of the most prominent performers recently, with Bitcoin briefly surpassing $44,000 last week, indicating optimistic indicators in various trading sentiments, suggesting an influx of external funds and driving up Bitcoin prices.

In addition to mainstream cryptocurrencies, meme coins were also highlighted last week, with many experiencing significant multiples in gains. Meme coins saw substantial increases as some cryptocurrency traders believed that Bitcoin and other mainstream cryptocurrencies had risen too much. Therefore, they turned their attention to thematic meme tokens, and their remarkable gains last week supported this trend.

Currently, the cryptocurrency market is characterized by a speculative atmosphere. With expectations of a rate cut in the United States, external funds are looking to participate in the Bitcoin spot ETF boom. Meanwhile, internal cryptocurrency traders are aiming to capitalize on the rare bull market to make substantial profits. Some traders are even choosing to engage with highly volatile meme coins. Both of these phenomena are ongoing.

Setting aside the higher speculative nature of meme coins, we believe that Bitcoin's current upward trend is indicative of a healthy and gradual rise. There hasn't been a sudden surge, and investors remain quite cautious in their buying. Sellers, often long-term investors, are hoping for even higher prices before selling. As a result, buying exceeds selling, leading to the year-end price rising to $44,000.

Assuming Bitcoin is to surpass the historical high of $69,000 in the zero-interest-rate environment of 2021, the Bitcoin halving might be the next catalyst. Although some credible research suggests that the Bitcoin halving may not drive an increase in the coin's price, markets often need attractive narratives to justify buying. The Bitcoin halving is indeed one such narrative, and combined with next year's expectations of a rate cut, Bitcoin might have the opportunity to retest recent highs in the second half of next year. However, uncertainties remain in the first half of the year, particularly regarding the rejection of the Bitcoin spot ETF. Still, this challenge is expected to be mitigated under the expectations of a rate cut.

Due to increasing data indicating a cooling of inflation in the United States, markets are chasing risk assets such as technology stocks and cryptocurrencies. In this context, speculative fervor is likely to persist for a more extended period. Various institutions released more signs of the cooling of U.S. inflation last week, nearly becoming a market consensus. Let's take a closer look at more details.

Combining expectations of a rate cut with uncertainties about the rejection of spot ETFs, the short-term direction of the cryptocurrency market is challenging to predict. Looking ahead to Bitcoin's trend next year, the issue of U.S. inflation has been confirmed to cool down. Even if the Fed does not cut interest rates, it will not further increase them. For example, last week, the United States announced the addition of 199,000 non-farm jobs in November, exceeding market expectations of 180,000, and the unemployment rate dropped to 3.7%, lower than the expected 3.9%. Currently, the U.S. economy and employment market remain better than investors imagined.

However, this will not give the Fed more reasons to raise interest rates. The global oil price has fallen below $70 per barrel, primarily due to an increase in oil production by oil-producing countries and weakening demand. The fall in oil prices also deeply affects the consumer price index. In the current environment of high-interest rates, the U.S. economy and employment maintain good growth. Although a robust job market will continue to bring upward pressure on prices, falling oil prices will offset commodity costs. The market consensus is that inflation will slow down, and there are essentially no significant issues with the direction of inflation.

For this reason, the Fed has to some extent achieved an economic soft landing. The entire U.S. economy continues to grow positively in a high-interest-rate environment, and the limited interest rate range has also controlled prices to some extent. Subsequent observations are needed to determine the trend, and the theme of inflation is expected to be thoroughly resolved. However, unless there is a significant economic recession, the Fed is unlikely to choose to cut interest rates in the short term. Now it is probably close to the so-called "neutral interest rate."

When the interest rate direction is determined to go down for a long time, investors will have more space to speculate on Bitcoin spot ETFs. Last week, more fund companies released negotiation messages with the SEC, claiming that the negotiation progress had reached "technical details," once again boosting market morale. Although the SEC has been continuously monitoring market manipulation activities in Bitcoin, the so-called technical details refer to how fund companies avoid excessive impact on Bitcoin prices during each fund adjustment through market-making and deep exchanges.

Simultaneously, more substantial progress in spot ETFs has also encouraged Bitcoin bulls to continue to push prices higher. Bitcoin once fell to $43,000 and then rose again to $44,000, showing that the bullish momentum is currently quite strong.

The sharp rise in Bitcoin has also caused substantial losses for the bearish side. Financial data analysis company S3 Partners estimates that shorting cryptocurrency concept stocks has lost $6 billion for short sellers since the beginning of the year. Although the bearish side seems to have suffered heavy losses, in reality, traders who

Yamini003

It's definitely going to continue to stretch.

Indra55

I think the possibility of this is still very high.