Bitcoin reversed its overnight gain to $94,000, falling back to $92,000 during US hours on Thursday, continuing choppy rangebound action after the wild first moves lower than higher earlier in the week.
Ethereum’s Ether held up relatively well, down just 0.7% on the day and changing hands above $3,100 in the afternoon hours. Among altcoins, Hedera (HBAR), and privacy-oriented Zcash led the downside with declines of 4-5%, while the broad market CoinDesk 20 index was 2% lower.
Quick trade ahead
Despite the pullback, BTC continues to hold well above the support level established around $85,000 earlier this week, suggesting that markets may settle into a holding pattern as liquidity thins toward the end of the year, Paul Howard, senior director of trading firm Wincent, said in a note.
“We continue to see cryptocurrency prices closely correlated with global macroeconomic events,” said Paul Howard, senior director at Wincent. “While December is typically a month of low liquidity, we observe that a higher bottom has been set in the last seven days around the $85,000 level.”
Without major new macro headlines, Howard expects more range trading between $85,000 and $95,000 for the rest of the month. “There is potential for some outperformance in altcoins, which typically do well in a low-liquidity, higher-volatility environment,” he added.
All eyes on Japan
On the macro front, markets enter December with eyes on the US Federal Reserve and, more crucially, the Bank of Japan (BoJ).
According to Mark Connors, founder and chief macro strategist of bitcoin investment consultancy Risk Dimensions, the BoJ’s interest rate decision is the “key event” this month as it determines the future of the yen-backed carry trade, a strategy in which investors borrow in yen to buy higher-yielding assets.
If the BoJ keeps interest rates steady, as Connors expects, it could reignite demand for risk assets, giving equities, bitcoin and gold a tailwind.
