Bitcoin Stalls at $94K Amid Year-End Liquidity Concerns; Altcoins Eye Potential Gains
Bitcoin’s recent attempt to conquer the $94,000 mark on December 4th met with resistance, triggering technical selling pressure and cooling its bullish momentum. The cryptocurrency subsequently retreated to hover above $92,000, settling into a new stalemate after a volatile “shakeout” period earlier this week. Analysts now anticipate that the year-end liquidity crunch could make a sustained breakthrough above $95,000 challenging for Bitcoin before the close of the year. However, this environment might surprisingly benefit altcoins.
Despite Bitcoin’s price retracement, the market has not shown signs of widespread panic. Crucially, Bitcoin has maintained the $85,000 support level established earlier in the week. Paul Howard, Senior Director at trading firm Wincent, suggests this indicates a potential shift in major capital flows into a “wait-and-see mode” as market liquidity tightens towards the year-end.
Howard further elaborated on market dynamics, stating, “We continue to observe a strong correlation between cryptocurrency prices and global macroeconomic events. While December is traditionally a month characterized by lower liquidity, the past week’s performance clearly demonstrates that Bitcoin’s foundational support has solidified around the $85,000 mark.”
December Outlook: Bitcoin Range-Bound, Altcoins Poised for Volatility
Forecasting the market trajectory for December, Paul Howard predicts that in the absence of significant macroeconomic shifts, Bitcoin is likely to trade within a range of $85,000 to $95,000. Interestingly, altcoins might emerge as the unexpected beneficiaries of this “low liquidity, high volatility” environment, potentially delivering more impressive returns.
On the broader macroeconomic front, beyond the eagerly awaited interest rate decision from the U.S. Federal Reserve, market participants are also closely monitoring the actions of the Bank of Japan (BoJ).
Mark Connors, founder and Chief Macro Strategist at Bitcoin investment advisory firm Risk Dimensions, highlighted the BoJ’s upcoming interest rate meeting as a “pivotal event” for market direction this month. Its outcome will directly influence the future of the “Yen carry trade”—a strategy where investors borrow low-interest Japanese Yen to invest in higher-yielding assets like U.S. equities and Bitcoin. This strategy has been a crucial funding source, underpinning the rally in risk assets throughout the year.
Connors’ assessment suggests that the Bank of Japan is most likely to maintain its current interest rates. Such a decision, he believes, would re-ignite market appetite for risk assets, providing a boost to stocks, Bitcoin, and gold.
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