Bitcoin’s technical correction found support at the 50-day moving average.BTC fell over 12% from its monthly high to $94,830 as the Santa Claus rally failed. The retreat was low-volume because investors and dealers were still in Christmas mode $22 billion in Bitcoin volume on Sunday, Dec. 29, down from $41 billion the day before. Friday’s volume was $45 billion, up from $33 billion Thursday. Normal market conditions see Bitcoin volume topping $100 billion every day.
Bitcoin Struggles After Fed Policy Shift
Bitcoin fell after the Federal Reserve’s harsh monetary policy meeting this month. It cut interest rates by 0.25%, although its dot plot showed only two cuts. The Fed hinted at four cuts in 2025. As ETF inflows declined and suspicions about a Strategic Bitcoin Reserve fell, Bitcoin struggled. Polymarket odds of Trump creating these reserves in the first 100 days are 29%, down from 60% in November.
History shows Bitcoin may not gain much in January. Since 2023, BTC has been positive six times. January saw 0.62% growth and 39% a year earlier. Bitcoin was only down twice in February, which was a good month. The January Effect, a phenomenon where financial assets tend to rise in value during the first month of the year, is a concept often observed in stock markets. However, its applicability to cryptocurrencies like Bitcoin is less clear-cut.
Mixed January results for Bitcoin
While Bitcoin has shown positive returns in January in some years, the historical data is mixed. Since 2023, Bitcoin has experienced positive returns in six out of eight January. Bitcoin crucial price, However, the average growth during these positive months has been relatively modest.
Historically, January has been a roller coaster for Bitcoin, with the cryptocurrency going through both gains and losses. With small gains like a 0.62% rise in January 2024 and a more substantial 39% increase the year before, Bitcoin has had positive returns six times since 2023.
Despite this, Bitcoin’s performance has been all over the place, and January is notoriously unpredictable due to factors like the policies of the Federal Reserve and more significant market movements. Predictions are also tricky because of the January Effect, a phenomenon in the stock market when assets tend to climb. What this means for Bitcoin is unclear.
Bitcoin Key Support or Bearish Signal?
The daily chart shows that Bitcoin is at a crucial support level, which could point to more gains in the coming weeks. It has found support at the 50-day moving average. Also, the coin has failed to move below the ascending trendline that connects the lowest swings since Nov. 17. The risk, however, is that the coin has formed a rising broadening wedge pattern, a popular bearish sign. Therefore, a drop below its lower side may point to more downside, potentially to $73,777, its March high.
Conclusion
Bitcoin crucial price, While the January Effect could potentially influence Bitcoin’s price to some extent, it’s crucial to remember that other factors will likely play a more significant role in determining its price trajectory. It’s essential to conduct thorough research and consider multiple factors before making any investment decisions related to Bitcoin.
FAQs
What is the January Effect in relation to Bitcoin?
The January Effect, a stock market phenomenon, suggests assets typically rise in value during January, but its impact on Bitcoin remains unclear and historically unpredictable.
Has Bitcoin been successful in January historically?
Bitcoin's performance in January has been mixed, with positive returns in six out of eight years, but the growth has varied from modest to substantial.
What is Bitcoin's current support level?
Bitcoin is holding a crucial support level at the 50-day moving average, which could signal potential gains if it maintains this support.
What could indicate a bearish trend for Bitcoin?
Bitcoin has formed a rising broadening wedge pattern, which is typically a bearish sign. A drop below the lower side could lead to further downside.
