December 4, 2022

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Why The Bitcoin Price Has A High Chance Of Resting At $16,000

2 min read
Why The Bitcoin Price Has A High Chance Of Resting At ,000

The Bitcoin price is trending to the downside and seems on track to retest its yearly lows at $15,550. The nascent asset class is facing the fallout of the FTX’s collapse. Once the world’s second-largest crypto trading platform, the company filed for bankruptcy protection. 

As of this writing, the Bitcoin price is seeing massive selling pressure. The cryptocurrency trades at $15,900 with a 4% and 2% loss in low and higher timeframes. BTC has been more stable than other assets in the crypto top 10 by market cap. 

In contrast, Ethereum (ETH) recorded a 10% loss over the previous week, while Cardano (ADA) and Dogecoin (DOGE) recorded a 9% and 14% loss, respectively, over the same period. Other cryptocurrencies follow this trend except for XRP, which still maintains some profits. 

BTC’s price trends to the downside on the daily chart. Source: BTCUSDT Tradingview

Low Volume Week Could Be An Obstacle For The Bitcoin Price

The general sentiment in the market seems biased toward another flash crash. However, the U.S. market might become less active in the coming days. 

The country will begin its Christmas-related holidays this week when its citizen celebrates Thanksgiving Day. Thus, the market might see low trading volumes. 

According to an analyst from Material Indicators, the long holiday week might extend the losses in the Bitcoin price and the crypto market, especially these days of heavy pessimist sentiment and negative news in the nascent asset class:

Note, it’s a holiday week in the U.S. so volume may be light. Could see some Q4 tax loss harvesting in TradFi contributing to the downward momentum in Crypto fueled by FTXscam contagion related FUD.

The analyst shared the image below and showed crypto exchange Binance’s orderbook. On this trading venue, the bid (buy) side seems thicker. 

Bitcoin price BTC BTCUSDT Chart 2
Source: Material Indicators via Twitter

At the time of writing and on higher timeframes, many more buying orders could operate as support for the Bitcoin price. In that sense, Material Indicators and others believe the crypto market is bound for sideways price action. 

This theory could be invalidated if there is new negative news related to FTX’s collapse or the contagion wrecking-havoc across the industry. According to rumors circulating across social media platforms, there is a high risk of a major crypto company filing for bankruptcy in the coming days. 

The macroeconomic landscape is improving, with U.S. inflation finally peaking. Per Fidelity’s Macro analyst Jurrien Timmer, this inflation peak will positively impact the markets. The crypto market might rebound if the bulls can defend the current range and the previous yearly lows.