Bitcoin has failed to overcome the key resistance level in the $17,200 per coin area. Today, the price has cautiously rolled back down from it, however this can still be regarded as a consolidation movement.
Technically, the main cryptocurrency still has some headroom downward in the $15,600 area, which looks like the most likely scenario for the development of events.
However, it is worth noting that in this week full of macroeconomic news, it is necessary to monitor two key events that may affect volatility and correct the technical picture.
Focus on CPI and the Fed
With four central bank meetings scheduled this week, the market is most looking forward to US inflation (CPI) data and the last Federal Reserve meeting of the year.
Analysts note that the fact that market participants are not buying the bottom now may be connected with this. Both macroeconomic events—the inflation report and the Fed's decision—may affect market volatility.
The CPI report will be released on December 13, and the meeting of the Federal Open Market Committee (FOMC) will be held on December 14. Experts note the particular importance of the consumer price index, which is often the driving force behind the cryptocurrency markets, drawing attention to the fact that it is likely to show higher-than-expected inflation data.
The Fed's move doesn't matter
While more than 80% of market participants expect the Fed to raise interest rates by 50 basis points, it is possible that the move could be higher depending on the CPI report.
If the Fed sees that inflation is still very high month on month and the 2% annual target they are aiming to reach is still a long way off, then another 75 basis points could be raised.
Even if the Fed chooses a lower rate hike than expected, the markets will still be under pressure.
If you look at previous bear markets, the price continued to fall even when the Fed's monetary policy began to change course in the direction of easing.
These processes have a lagging effect, so even hypothetically, an immediate rate cut will not be able to save the day.
Bitcoin will win the competition with gold
Despite the fact that both Bitcoin and gold trade inversely with the US currency, Bloomberg Senior Commodity Strategist Mike McGlone believes that Bitcoin is likely to eclipse gold.
The analyst draws attention to the fact that the main cryptocurrency is currently four times more volatile than the precious metal.
McGlone said that Bitcoin is a "top contender" to gold and could move to a higher-beta and bonds.
"What Stops Bitcoin From Rising vs. Gold? The world's most fluid 24/7 trading vehicle, Bitcoin, has gained status in 2022 as a leading indicator and declined in a risk-off environment, but the crypto may be transitioning toward a high-beta version of gold and US Treasury."
McGlone also compares BTC to Tesla shares, as analysts often group the two assets together as they use innovative technologies. He believes that the price of Bitcoin in relation to TSLA may be in the process of forming a bottom.
The commodity strategist previously noted that next year could be a breakout year for cryptocurrencies after more than a year of downward trends.
Opinion: The worst for BTC is over
Although the question of where the bottom is at the main cryptocurrency remains open, there are those who express bold opinions on this matter.
For example, Arthur Hayes, former CEO of crypto derivatives platform BitMEX, believes that the worst for Bitcoin is over. He argues that "largest most irresponsible entities" have run out of BTC to sell.
"Looking forward, pretty much everyone who could go bankrupt has gone bankrupt," Hayes said.
He clarified his position by explaining that when centralized lending firms (CELs) are in financial trouble, they often first solicit loans and then sell BTC because it acts as a "reserve asset of crypto" and "the most pristine asset and the most liquid."
"When you look at the balance sheet of any of these of the heroes, there's no Bitcoin on it because what do they do, they sold the Bitcoin as they were going bankrupt, they sold the Bitcoin during the wave before they went bankrupt."
Hayes made a similar argument on his December 10 blog, explaining that while this "credit crunch is ongoing," large physical sales of BTC are taking place on exchanges from both CELs trying to avoid bankruptcy and trading firms that have had their loans revoked and must liquidate their positions.
"I can't demonstratively prove that all Bitcoin held by these failed institutions was sold during the multiple crashes, but it does look as if they tried their best to liquidate the most liquid crypto collateral they could right before they went under."
However, Hayes believes that large-scale liquidations have come to an end, explaining in his blog that "There is no reason why you would hold on if you had an urgent need for fiat."
The market is still in the grip of a crypto winter after the FTX crash and the aftermath, but Hayes believes the market could recover slightly in 2023.
"I believe the US Treasury market will become dysfunctional at some point in 2023 due to the Fed's tightening monetary policies... and Bitcoin and all other risk assets will spike higher."
