Market Overview
Bitcoin has reversed its overnight climb to $94,000, dipping back to $92,000 during U.S. hours Thursday. This continues the choppy, range-bound action observed after significant moves earlier in the week. Low liquidity in December may cap Bitcoin's recovery rally, but range-bound trading could potentially benefit smaller digital assets.
Ethereum has held up relatively well, showing a decline of only 0.7% on the day and trading above $3,100 in the afternoon hours. Among other altcoins, XRP, Hedera, BCH, and the privacy-focused Zcash led the downside, experiencing declines of 4% to 5%.
Support Levels and Trading Patterns
Despite the recent pullback, Bitcoin continues to hold well above the support level established around $85,000 earlier this week. This suggests that markets may be settling into a holding pattern as liquidity thins heading into the year-end. Paul Howard, senior director at trading firm Wincent, commented that cryptocurrency prices remain closely correlated with global macroeconomic events.
"While December is typically a low-liquidity month, we observe a higher floor has been set the past seven days around the $85,000 level," Howard stated in a note. Without major new macro headlines, Howard anticipates more range-bound trading between $85,000 and $95,000 for the remainder of the month.
"There's potential for some outperformance in altcoins, which typically do well in a low-liquidity, higher-volatility environment," he added. Markets are entering December with a focus on the U.S. Federal Reserve and the Bank of Japan.
Key Macroeconomic Influences
According to Mark Connors, founder and chief macro strategist of Bitcoin investment advisory Risk Dimensions, the Bank of Japan's rate decision is the key event this month. This decision will determine the future of the yen-funded carry trade, a strategy where investors borrow in yen to purchase higher-yielding assets.
If the Bank of Japan holds rates steady, as Connors expects, it could reignite demand for risk assets and provide a tailwind to equities, Bitcoin, and gold. The prevailing macro backdrop will likely be the determining factor in whether Bitcoin can break above $95,000 or continue consolidating through year-end.