While Bitcoin’s chances of breaking the $ 100,000 mark have fallen since hitting a new all-time high (ATH) of $ 69,000, traders aren’t entirely dismayed. Currently, most analysts view the current price zone as a large accumulation zone.

Last week the market was a bit rougher as investors grew nervous with the Fed’s Open Market Committee (FOMC) meeting yesterday (December 15), but the Fed’s confirmation of the launch of three rate hikes and the reduction in bond purchases in 2022 appears to have created market volatility for the past week. The Fed will buy $ 60 billion a month in bonds starting in January, up from $ 90 million in December, and said it is likely to continue this course for the coming months.

US stocks trimmed losses and rose slightly yesterday as the market weathered one of the greatest uncertainties yet. The S&P 500 rose 1.63% to 4,709, while the Nasdaq Composite rose 2.15% to 15,565. The Dow Jones Industrial Average rose 383.25 points, or +1.08%. All three were in the red a day before the central bank’s decision.

The move comes as the central bank is grappling with the highest inflation in nearly four decades. The Fed is expected to accelerate tapering this month.

“Now I have seen how high the rate of increase is and how quickly it will go. Uncertainty is taken from the market. From an equity perspective, all they have to do now is focus on earnings, margins and growth, ”said Jim Caron, strategist at Morgan Stanley Investment Management.

The entire crypto market is closely watching the Fed’s decision as many believe it will be generally viewed as pessimistic about risky assets, including cryptocurrencies. The price of Bitcoin and other cryptocurrencies has plummeted in the past few weeks as investors worry about the restrictive adjustment in Fed policy. The price hike follows Wednesday’s news suggesting a “relief rally”.

Bitcoin’s trading volume on major centralized exchanges was slightly higher on Wednesday than it was a day ago. The prices of other major cryptocurrencies also rose. Ether has rallied over $ 4,000 after falling below $ 3,700 earlier this week.

Source: CryptoCompare

Bitcoin has held the $ 46,000 support and is trying to reverse its short-term downtrend. However, upside momentum appears to be capped ahead of the $ 52,000 resistance, which is almost in the middle of the 20% sell-off earlier this month.

A more in-depth analysis of recent price action was provided by options trader “John Wick”, who released the chart below to highlight the bullish and bearish reversals of the past two weeks.

BTC / USDT 4-hour chart | Source: TradingView

According to Wick, Bitcoin price action recently established “solid fundamental support”, represented by the yellow horizontal line at $ 46,588, which is structurally known as “Phase 1 base.”

“We can expect increased volatility. I am aiming for compression (squeeze). This could play out like it did in July after phase 1 support was put in place. ”

The daily chart’s relative strength index (RSI) is oversold at its highest level since May 20th, before prices rallied sharply. The dynamics also stabilize after several weeks of low volume.

Price conditions are less favorable on the weekly chart as the uptrend appears to be slowing. At the moment, that suggests that short-term buyers in the $ 50,000- $ 55,000 range could struggle.

Source: TradingView

Volatility is normal

Compared with the historical price development based on the ATH level, the current market volatility is no cause for concern, according to the independent market analyst “Rekt Capital” tweets that after similar pullbacks in previous bull markets, the market rose higher and higher than the fear was gone.

Panic and pessimistic sentiment towards Bitcoin are currently extreme. But the 38% retracement isn’t too serious. Over the years, Bitcoin has fallen 30-40% several times during the bull market. In fact, Bitcoin was down 53% last May. A decline of 38% is not too extreme. ”

The trader “Crypto Ed_NL” sees a bull run that is certain to come and publishes the following chart, which outlines how the price movement could develop in the next few weeks.

“Expected in the coming hours: 1 bearish pre-FOMC (green box) followed by a post-FOMC rally, continuation of the bull cycle.”

BTC / USDT 1 hour frame chart | Source: TradingView

Echo of September’s Bitcoin price action

Another perspective was given by the investor “Crypto Bull God” who published the following chart comparing the current price development of Bitcoin with the performance in September before the bullish breakout.

“I’ve just stared at this for the past few days. I’m not saying it will happen the same way, but I’m sure there is now a resemblance to this September. ”

BTC / USDT 12-hour price chart | Source: TradingView

While no one can know for sure how things will play out at the end of 2021, a possible sign that Bitcoin could end the year strong has been pointed out in the past. tweets by the analyst “Michaël van de Poppe”.

“Whales often buy and enter markets in these areas. The retail industry is afraid ”.

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Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.

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