- Some Altcoins have continued to struggle as bearish pressure builds.
- Fed policy and Trump’s influence remain pivotal for the crypto outlook.
- Two Altcoins are at risk of a reversal as macro data weighs on sentiment.
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Cryptocurrencies started the week under selling pressure, following the downtrend of the previous week. But as the U.S. trading session unfolded, the market quickly found stability and rebounded from lower levels, easing the selling pressure. This dynamic signals that the crypto market remains in a phase of consolidation, despite lingering concerns.
After a lackluster performance in December, the cryptocurrency market entered January with optimism. However, ongoing macroeconomic developments continue to weigh on prices. U.S. economic data suggests the Fed may be less aggressive in cutting rates, a trend that has been evident since last week. The stronger-than-expected labor market data reinforced expectations that the Fed might only lower rates once this year, or perhaps even pause the rate-cutting cycle entirely.
2 Critical Factors: Fed Policy and Trump's Influence on Crypto
As the new year unfolds, all eyes are on the U.S. Federal Reserve and the economic landscape, which is further complicated by former President Trump’s anticipated return to office next week. His policies could bring inflationary pressures, affecting market sentiment and risk appetite.
At the same time, Trump's generally favorable stance toward cryptocurrencies keeps the market on edge, hopeful for favorable policy moves. However, distractions from other pressing issues or sudden policy shifts could dampen that optimism, triggering a negative market response.
Meanwhile, U.S. inflation data set for release this week will hold significant weight in determining the Fed's next moves. If the numbers show sustained inflationary pressures, the central bank may adjust its stance, which could, in turn, impact cryptocurrency prices. Trump’s inauguration on January 20 only adds to the uncertainty, keeping investors guessing about the potential economic shifts on the horizon.
In conclusion, while January began with some encouraging signs for cryptocurrencies, the market now faces challenges. The evolving stance of the Fed remains a downside risk, but investor optimism surrounding Trump's approach to crypto helps sustain market hopes. To see meaningful movement, the market needs concrete action, not just speculation.
Bitcoin’s Resilience in a Narrow Range
Bitcoin, which commands 58% of the market, has struggled to break free from a narrow range, continuing its indecisive movement. After dipping below $90,000 yesterday, buyers pushed Bitcoin back toward $95,000, temporarily lifting the pressure. However, the rebound has not yet triggered a clear signal of recovery.
2 Altcoins Underperforming, at Risk of a Reversal:
1. Ethereum Faces the Brunt
Ethereum, along with other altcoins, has felt the weight of the recent sell-off more heavily than Bitcoin. Ethereum briefly fell to $2,920 before recovering to $3,180, but its bearish trend persists. Unlike Bitcoin, altcoins like Ethereum have yet to find lasting support.
After rejecting the $4,000 mark last month, Ethereum has entered a correction phase. Although it reached $3,700 in the week prior, the momentum quickly fizzled out. Ethereum recently tested the $3,250 support level but broke below it, dipping toward the next critical support at $3,000. A further decline could see Ethereum approaching the $2,750 mark, aligning with key technical levels. On the upside, reclaiming the $3,250 level would be crucial for a potential recovery.
2. BNB: At a Crossroads
BNB is testing a critical support level after losing its $685 mark last month. The cryptocurrency has traded in a narrow range since, reflecting market indecision. A close below the $685-$690 range could signal a bearish breakout, with potential declines toward $630. However, if support holds, BNB could challenge the $710-$715 resistance zone, with an upside breakout potentially reaching $830.
In sum, the crypto market is grappling with a mix of macroeconomic influences, market sentiment shifts, and technical challenges. As the market searches for direction, investors must remain alert to the potential triggers—whether from policy changes or market events—that could dictate the next move.
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Disclaimer: This article is written for informational purposes only. It is not intended to encourage the purchase of assets in any way, nor does it constitute a solicitation, offer, recommendation or suggestion to invest. I would like to remind you that all assets are evaluated from multiple perspectives and are highly risky, so any investment decision and the associated risk rests with the investor. We also do not provide any investment advisory services.