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Bitcoin saw positive price action recently but failed to follow through and could remain rangebound for December. The cryptocurrency rose from a new yearly low at $15,500, and market participants were expecting further profits, but the market has stalled.
As of this writing, Bitcoin is moving between $16,900 and $17,100. The cryptocurrency still maintains profits from its previous week, but today’s trading session has leaned towards the downside.
BTC’s price moving sideways on the daily chart. Source: BTCUSDT Tradingview
No Christmas Miracle For Bitcoin?
In a recent market update, trading desk QCP Capital highlighted the positive performance of Bitcoin and Ethereum in December. These digital assets have been closely following the trajectory of the stock market.
The firm believes equities have been showing strength on the back of a potential U.S. Federal Reserve (Fed) pivot. The financial institution hinted at moderating its monetary policy and reducing its interest rate hike program.
This potential change triggered “strong” bullish momentum for the stock market, allowing Bitcoin and Ethereum to rise 13% and 22% in the past two weeks. Despite the collapse of FTX in November and the fear of contagion, its value is almost back to October levels.
In this context, market participants have been quick to call out the end of the bear market, but QCP Capital claims that there are reasons to maintain a bearish bias. For example, robust economic data from the U.S. might support the Fed to continue its tightening policy.
QCP Capital stated the following regarding the current price action in the legacy financial market and its impact on the crypto market:
While many are saying that BTC and ETH are lagging equities and should play catch up, rather we see it as equities having overshot fundamentals and will soon be reeled back.
Thus, the possibilities of the stock market pushing down on Bitcoin and Ethereum are high. There are indications of possible downside pressure for stocks, crypto, and risk on assets.
Analyst Caleb Franzen pointed to the VIX index; an indicator used to measure volatility in legacy financial markets. This metric has provided a solid strategy for risk asset buyers in 2022. The analyst said:
The CBOE Market Volatility Index #VIX fell below 20 last week, but has launched higher today! As I’ve shared since August, the top strategy of 2022 has been:
• Buy risk assets when $VIX > 30
• Sell risk assets when $VIX < 20
Regardless of the bullish expectations, the crypto market might see more selling pressure in the coming weeks. This month’s Federal Open Market Committee (FOMC) will shed more light on the direction of the macroeconomic landscape and the landscape for risk-on assets, such as Bitcoin.