As Bitcoin navigates the final weeks of the year, uncertainty looms over the market, with the latest weekly close offering little reassurance to traders. Whales triggering sell-offs have contributed to a change in sentiment, keeping the crypto community on edge. With macro data releases shaping short-term volatility, the focus remains on the Federal Reserve's recent decisions and upcoming United States gross domestic product (GDP) figures. Amidst concerns over high transaction fees and a potential lack of a "Santa rally," attention turns to the possibility of a spot exchange-traded fund (ETF) approval in the coming month.
The December 17 weekly close marked a midpoint in a local sell-off for Bitcoin, stirring caution among traders and analysts. Bitcoin's loss of the 21-day moving average is viewed as inherently bearish, with expectations of year-end profit-taking and tax loss harvesting prevailing. Key support levels, including the Fibonacci retracement level tied to the November 2021 all-time high, are areas of contention. As macro events unfold, the focus shifts to the November Personal Consumption Expenditures (PCE) Index, a crucial indicator for the Federal Reserve. The potential for a Fed "pivot" has entered market discussions, despite the next Federal Open Market Committee (FOMC) meeting being scheduled for the end of January.
Transaction fees on the Bitcoin network have become a hot topic, reaching their highest levels since April 2021. While fees have eased in the new week, debates over their impact persist. Some argue that the fee market is functioning as intended, while others call for attention to the decision on approving the first U.S. spot Bitcoin ETFs, expected early next month. The recent dip in Bitcoin network growth, measured by the number of new addresses, adds a layer of uncertainty to the market. Analysts suggest an uptick in new addresses is crucial for sustained bullish momentum.
Amidst these factors, the Crypto Fear & Greed Index reflects a pause in market greed, standing at 65/100. While still considered greedy, it represents a cooling sentiment compared to recent weeks. This shift prompts reflections on whether the market is entering a phase of disbelief rather than euphoria. As Bitcoin faces its yearly close, the interplay of these elements continues to shape the crypto landscape, leaving participants cautiously optimistic but vigilant for potential developments.
