(Kitco News ) - Altcoins continued to receive love from traders on Thursday as Bitcoin (BTC) consolidated below $44,000 but remains supported above $43,000, despite calls from multiple analysts that a “healthy correction” is in order before it can resume its climb higher.
Stocks bounced back from Wednesday’s selloff – the worst one-day decline in months – as the market remains convinced that the Federal Reserve will be forced to cut interest rates early in 2024 despite pushback and comments from central bank officials that signaled otherwise.
At the closing bell, the S&P, Dow, and Nasdaq finished in the green, up 1.03%, 0.87%, and 1.26%, respectively. The DXY declined 0.56% and traded at 101.77, its lowest level since August, while the U.S. 10-year Treasury trades at 3.894%.
Data provided by TradingView shows that Bitcoin traded in a range between $43,305 and $44,250 on Thursday, with neither the bulls nor bears gaining the upper hand to drive the price action.
“January Bitcoin futures prices [were] higher and near the recent contract high in early U.S. trading Thursday,” according to Kitco senior technical analyst Jim Wyckoff.
“A price uptrend on the daily bar chart has stalled out at higher levels,” Wyckoff said. “However, bulls still have the firm overall near-term technical advantage and have regained some momentum this week.”
"This week has witnessed a sideways trend, with Bitcoin moving between $40,500 and $44,250 and Ethereum between $2,150 and $2,280,” said Rachel Lin, co-founder and CEO of SynFutures. “Both these coins and the broader market are consolidating near their recent highs following a rapid increase in value during November.”
“One notable effect of this sideways movement is the cooling down of RSI, which, two weeks ago, was in highly overbought territory,” Lin said. “Bitcoin's weekly RSI stands at around 75, down from 82 at the beginning of the month.”
“Between Bitcoin and Ethereum (ETH), BTC continues to outperform,” she noted. “The ETH/BTC pair has once again fallen to its long-term support zone of 0.05, from where it has bounced several times. However, each bounce has resulted in a lower high, marking a clear descending pattern for this pair.”
“One main reason for the underperformance of Ethereum could be the overperformance of SOL,” Lin said. “Solana has continued outperforming all the other projects, gaining momentum from positive developments, such as this week's news about Solana surpassing Ethereum in daily DEX volume, further boosting the bullish sentiment toward SOL.”
“Looking at the broader crypto market, we continue seeing bullish signs,” she noted. “The altcoin market broke above its 680 billion resistance level early in the month and has successfully retested that level, potentially converting it into support. A sustained break above this level is a positive development as it marks the breakout from the sideways trend that started in June 2022.”
To get a better understanding of what market participants are expecting, Lin looked to the futures markets for clarity.
“Regarding derivatives data, open interest saw a marginal decline over the past week for all the major coins and tokens,” she said. “However, the put-call ratio remains skewed, favoring the calls. The top 10 options with the highest open interests continue to be all calls, which shows the market is expecting more upward potential than downward risks. Overall, the market remains in a consolidation phase, which inevitably follows a massive bullish phase like we saw in November.”
Analysts at QCP Capital noted that the potential launch of a spot BTC ETF “is less than three weeks away,” but warned that there is a strong likelihood “that the actual demand for the BTC Spot ETF at the start will fall short of market expectations,” which “sets up a classic 'sell the news' scenario in the 2nd week of Jan.”
“For this reason, we expect topside resistance for BTC in the 45-48.5k region and a possible retracement to 36k levels before the uptrend resumes,” they said. “We are confident that the trend higher will eventually continue (perhaps after a few weeks) as the market positions for a strong rally into the BTC halving.”
“ETH might also be an interesting laggard play here as the market's anticipation could quickly turn to the ETH spot ETF, potentially leading to some switching out of BTC to ETH,” they added. “We're also leaning against very strong support in the ETHBTC cross at the 0.051 level.”
“We think that any ETH spot ETF is still many months away, but it won't stop the recently approved BTC spot ETF providers from immediately filing for an ETH spot ETF,” they concluded. “This kind of headline excitement could create some speculative uplift for ETH price whether it is warranted or not.”
Altcoin season continues
It was a positive day for the broader crypto market as the vast majority of tokens in the top 200 recorded gains, with 18 coins seeing double-digit increases.
The Solana-based DeFi protocol Raydium (RAY) led the field with a gain of 62.5%, followed by an increase of 27.3% for Tellor (TRB), and a gain of 24.9 for NEAR Protocol (NEAR). Helium Mobile (MOBILE) was the biggest loser, with a decline of 14.2%, while Helium (HNT) fell 10.6%, and IoTeX lost 8.05%.
The overall cryptocurrency market cap now stands at $1.65 trillion, and Bitcoin’s dominance rate is 51.9%.
