The downturn in the cryptocurrency market was short-lived as prices were back on the move higher on Thursday, with many tokens recouping all of Wednesday’s losses to post new 2024 highs amid the building momentum.
Stocks continued to struggle to find their footing, initially opening higher, but sliding lower throughout the day as investors continued to reevaluate their expectations for an early interest rate cut in 2024. While Federal Reserve officials agreed during their last policy meeting of 2023 that interest rates were likely at their peak, with almost all of them predicting lower rates "would be appropriate by the end of 2024," the conversation lacked details as to when a rate cut would come, leaving investors to speculate when it will occur.
At the closing bell, the S&P and Nasdaq were in the red, down 0.34% and 0.56%, respectively, while the Dow finished flat.
Data provided by TradingView shows that Bitcoin (BTC) climbed from support at $43,000 to hit a high of $44,788 in the afternoon, with bulls looking as though they will continue to push the price action higher, bolstered by the expectation that the approval of the first spot BTC ETF is imminent. At the time of writing, BTC trades at $44,400, an increase of 3.85% on the 24-hour chart.
BTC/USD Chart by TradingView
“January Bitcoin futures prices [were] up a bit in early U.S. trading, following solid losses Wednesday,” according to Kitco senior technical analyst Jim Wyckoff.
Bitcoin futures 1-day chart. Source: Kitco
“Bulls still have the near-term technical advantage but may be getting tired as a price uptrend on the daily bar chart has stalled out,” Wyckoff said. “Bulls still have the overall near-term technical advantage but need to show fresh power soon to revive the near-term price uptrend.”
While the sudden drop in prices on Wednesday caught many off guard and had some worrying about the return of crypto winter, Greg Magadini, the director of derivatives at Amberdata, said the derivatives market indicates that things remain bullish.
“Looking at the reaction in the Options market yesterday, the chart [below] depicts the pricing of call options VS put options, where the horizontal orange line would be parity,” Magadini said in a note to Kitco Crypto.
“The spot sell-off yesterday, due to commentary from some market participants speculating that the BTC ETF would NOT be approved, sent the market crashing, especially crashing hard due to leveraged futures and perps holders needing to liquidate,” he said.
“However, the options market didn’t react the same,” he noted. “No bearishness was priced into the puts (at worst it was momentary parity) but just as quickly call pricing recovered its premium over puts and now the pricing for calls is back to recent highs.”
“The option market is just as bullish as ever and didn’t ‘buy’ the story of a spot ETF denial,” Magadini concluded. “The rest of the market is now waking up to similar sentiment, as we head into decision week.”
According to market analyst Rekt Capital, Bitcoin has reclaimed an important support level and “needs a daily candle close above this resistance to attempt another run to the upside.”
BTC/USD 1-day chart. Source: X
Rekt Capital added that it is “Important price doesn't end up as an upside wick like before (yellow circles).”
Altcoins on the road to recovery
The vast majority of tokens in the top 200 recorded gains on Thursday, further evidence that the market has put Wednesday’s FUD in the rearview mirror.
Daily cryptocurrency market performance. Source: Coin360
Beam (BEAM) led the field with an increase of 35.6%, followed by gains of 35.3% for Neutron (NTRN) and 33.9% for Braintrust (BTRST). Internet Computer (ICP) led the losers with a decline of 8.15%, while Theta Fuel (TFUEL) fell 7.77%, and Sei (SEI) lost 7.5%.
The overall cryptocurrency market cap now stands at $1.69 trillion, and Bitcoin’s dominance rate is 51.3%.
