Bitcoin has returned to its week low of $85,500 after suffering the dreaded “Bart Simpson pattern” earlier on Wednesday, where the price quickly runs higher, flattens out for a few minutes, and then just as quickly crashes back to its previous spot. The resulting shape on the charts ends up resembling the head of the famous cartoon character.
The crypto market again seems to be stuck in the troublesome scenario of not being correlated with stocks at all when they are heading higher, but having a 1:1 correlation with stocks when things turn south.
In fact, the morning’s sharp rally crumbled along with the Nasdaq, which began to fall due to further waning enthusiasm for AI trading. About ninety minutes before the close, the tech-heavy index is down 1.5%, led by much steeper declines for much of the chip sector.
Perhaps more frustrating for crypto bulls, however, is the continued sharp upward trajectory in the precious metals – silver up another 5% to another new record and gold up 1% and just shy of a record high. There was once a time when bitcoiners expected BTC to be the asset of choice when the Fed eased monetary policy or as a flight to safety when stocks ran into trouble. Instead, its gold, silver and even copper capture that bid.
This week’s crypto leaderboard isn’t pretty. Bitcoin is lower by 8%, ether by 15%, and solana and XRP by 12%.
Where is the floor?
Bitcoin is likely to be stuck in the range between $86,000 and $92,000, according to Jasper De Maere, desk strategist at Wintermute. He added that because the current consolidation range is experiencing high volatility, today’s sudden price moves are not that out of the ordinary as traders suffer liquidations.
De Maere cautioned against reading too much into technical indicators at the moment and expects more profit-taking over the next two weeks, driven by year-end portfolio adjustments and tax considerations. “People are liquidating positions to take a breather … short-term rallies sell out quickly.”
He expects bitcoin’s sideways movements to continue until new catalysts, one of which may be large options expiring at the end of December.
While not suggesting a bottom yet, De Maere said the market is starting to show those signs. “I feel like we’re in maximum pain,” he said. “In the short term, I would say we are definitely oversold.”
