Bitcoin and other cryptocurrencies experienced a slight decline on Friday as the market eagerly awaited regulatory decisions regarding crypto funds. Despite this, traders are optimistic that the recent rally in digital assets will continue.
In the past 24 hours, the price of Bitcoin has dropped by 3% to $36,250, stepping back from its recent high near $38,000. This high marked the highest point for the largest digital asset since the cryptocurrency market went through a severe bear market in May 2022. Bitcoin has made an impressive recovery of over 30% in just a few weeks, breaking free from a period of subdued crypto trading. However, it has encountered resistance at the $38,000 level.
According to Rachel Lin, the CEO of trading platform SynFutures, “Bitcoin experienced a slight pullback this week after reaching the $38,000 level. Currently, this level is acting as resistance, with Bitcoin being rejected from the zone twice in two weeks. On the downside, $35,000 is likely to serve as the next support zone, followed by $31,500.”
The significant rally of Bitcoin, which has outperformed the Dow Jones Industrial Average and S&P 500, is largely attributed to the anticipation of regulatory approval for the first spot Bitcoin exchange-traded fund (ETF). This fund, which would hold actual Bitcoin, is expected to generate renewed investor interest in digital assets and subsequently support prices.
Delay in Securities and Exchange Commission’s Decision on Bitcoin ETFs
The Securities and Exchange Commission (SEC) has once again postponed its decision on spot Bitcoin ETFs, extending the deadline for Hashdex’s application from Friday to January 1, 2024. Franklin Templeton’s spot Bitcoin ETF application was also due for a decision on the same day.
Despite these delays, traders remain confident in Bitcoin’s prospects and anticipate further gains.
Strong Inflows into the Crypto Ecosystem
According to Lin, money continues to pour into the crypto ecosystem, marking the seventh consecutive week of positive inflow. The options market shows no signs of change, with call options ranging from $30,000 to $50,000 dominating November and December. The call to put ratio stands at two to one, indicating a strong bullish sentiment among investors. Call options enable traders to purchase assets at a specified price, suggesting that investors anticipate Bitcoin reaching or surpassing $50,000 in the coming weeks or months. Conversely, put options represent bearish bets.
Wider Market Movement
In addition to Bitcoin, Ether, the second-largest cryptocurrency, experienced a 4% decrease and fell below $1,970. Other smaller tokens and altcoins followed suit, with Cardano down 7% and Polygon plunging 9%. However, the performance of memecoins varied, with Dogecoin experiencing a 3% increase and Shiba Inu dropping by 2%.