Bitcoin
and other cryptocurrencies slipped on Monday amid signs that more traders are taking profits after a recent rally in digital assets. While prices could still fall further, cryptos continue to benefit from multiple factors.
The price of Bitcoin has fallen 2% over the past 24 hours to below $41,000, around its lowest level in two weeks and marking a further retreat from recent 20-month highs above $44,000. The largest digital asset has rallied by some 50% in two months, spurring calls of a new crypto bull market and ending a multi-month stretch of subdued trading.
“Bitcoin market structure remains strong with a top close to $45,000. For Bitcoin to take a breather and define a new range can be seen as a healthy sign,” said Anthony Rousseau, head of brokerage solutions at broker TradeStation. “It’s possible we have the perfect storm brewing for a strong 2024.”
Indeed, crypto bulls are still eyeing more gains, with jockeying in the options market revealing that it remains a popular bet that Bitcoin will hit $50,000 in the coming weeks.
Digital assets have benefited from a number of positive factors, including expectations that U.S. regulators will soon approve the first spot Bitcoin exchange-traded fund (ETF), ushering in a fresh wave of investor interest. Historically tight token supply and the macroeconomic backdrop also have helped, with Bitcoin rallying in step with the
Dow Jones Industrial Average
and
S&P 500
amid hopes that the Federal Reserve will cut interest rates multiple times next year.
But there are now signs that some crypto traders are taking profits, though indicators still point to much of Bitcoin’s token supply being held by stubborn long-term investors. Digital asset investment products snapped an 11-week run of inflows, analysts at digital asset manager
CoinShares
wrote in a note Monday. Minor outflows of $16 million, concentrated in Bitcoin products and seen across a mix of regions, “suggest this was more related to profit-taking rather than a turn in sentiment towards the asset class,” the analysts wrote.
With continued selling pressure from profit-taking, Bitcoin’s technical market backdrop appears to be weakening, and prices look vulnerable to falling further.
“We may be seeing profit-taking from all the upside from the October lows. Working off this scenario suggests a pullback to the $38,000 area if the market falls below $40,000,” said Alex Kuptsikevich, an analyst at broker FxPro. “But even this potentially nasty drawdown looks to be just part of a larger bull cycle that Bitcoin is now moving within.”
Beyond Bitcoin,
Ether
—the second-largest crypto—lost 4% to $2,130. Smaller tokens or altcoins were even weaker, with
Cardano
down 7% and
Polygon
plunging 8%. Memecoins were similarly in the red, with
Dogecoin
dropping 7% and
Shiba Inu
shedding 9%.
Write to Jack Denton at [email protected]
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