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(Kitco News) – Bitcoin’s (BTC) price has been in a downtrend since the top crypto hit a new yearly high of $38,458 on Coinbase on Friday as crypto investors continue to take profits and rebalance their portfolios following the strongest rally in the crypto market year-to-date.
The total market capitalization briefly hit a high of 1.45 trillion as BTC rallied, but has since pulled back to $1.41 trillion amid the profit-taking and rebalancing.
Analysts are now expecting a bout of sideways trading due to the absence of any notable developments or important dates to pay attention to, while some are holding out for a Santa Claus rally that pushes BTC through resistance at $38,000 and $40,000.
#Bitcoin still facing the final resistance at $38K.
No breakout and probably more consolidation before we’ll start to rally.
Buying the dips is the way to go.
If $36K is lost, then I’m aiming for $33-34K for a longer correction. pic.twitter.com/V6dJaYECMp
— Michaël van de Poppe (@CryptoMichNL) November 27, 2023
Discussing last week’s spike in volatility, Matteo Greco, research analyst at Fineqia International, said, “The initial negative sentiment following the Binance CEO’s departure was swiftly offset by the positive news that the major digital asset exchange faced no further regulatory action from US authorities, contributing to renewed stability in the market.”
“Any news related to settlements between law enforcement and digital asset service providers plays a vital role in bridging traditional finance and digital assets, increasing the likelihood of capital inflow from traditional finance investors,” he said.
Further evidence of the rising sentiment can be found in the discount of the Grayscale Bitcoin Trust (GBTC), which has fallen to 8.1%, Greco said.
“This marks the narrowest discount recorded since August 2021, indicating increased investor confidence in the potential approval of a Bitcoin Spot ETF, with the final deadline for the SEC’s decision set for January 10, 2024, regarding one of the multiple filings,” he said. “Investor confidence is also evident in the Grayscale Ethereum Trust (ETHE), currently trading at a 12.7% discount, the narrowest level since January 2022.”
“Capital inflows are also reflected in the ETPs market, which recently recorded the highest amount of Bitcoin under management integrated into financial instruments,” he added.
Greco noted that the total volume traded on centralized exchanges in November hit $729 billion, which is the highest amount since the beginning of Q2 2023. “However, liquidity has not seen a proportional improvement, with slippage for a $100,000 sell order on the BTC/USD pair remaining at similar levels observed in previous months,” he said. “Price slippage, indicating the difference between expected and executed trade prices, has not fully recovered since the FTX collapse and Alameda’s exit from the market.”
He said this is an indication that “market makers remain cautious in providing additional liquidity, despite the strong price action and renewed trading activity.”
As for what could rectify this situation, Greco pointed to the approval of a spot Bitcoin ETF in the U.S. This “could not only likely bring a capital influx but also inject significant liquidity into the market, fostering more stable prices and facilitating more favorable trades on both digital assets exchanges and financial instruments incorporating digital assets as underlying assets,” he said.
Until then, multiple analysts, including Doctor Profit, are warning about near-term weakness and see the potential for a pullback into the lower $30,000 region.
Few days ago #Bitcoin hit $38.500 region and I told you to place several short orders in exact this region
$36.900 is MA20, and you know what’s next when MA20 breaks down, 33k ⏳
Keep eyes on MA20 sirs, keep short open
— Doctor Profit 🇨🇭 (@DrProfitCrypto) November 27, 2023
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