Key Points
- Bitcoin surged to a new all-time high of $109K in December, but has since witnessed significant profit-taking.
- The market is currently in a state of uncertainty, with the upcoming FOMC meeting potentially impacting Bitcoin’s recovery.
Bitcoin began November at $68K and, within two months, reached an all-time high of $109K, representing a significant 60% increase.
The remarkable gains led to inevitable profit-taking, with investors cashing out an impressive $3 billion in December.
Market Uncertainty
The market is now waiting for a recovery, as holding Bitcoin at $100,000 could become problematic without one.
Traders are becoming more cautious in the derivatives market, as evidenced by a rapidly shrinking leverage ratio. This indicates uncertainty about the future direction of Bitcoin’s price.
Furthermore, there has been a decrease in the number of individuals moving Bitcoin off exchanges. In fact, exchange outflows experienced a significant single-day drop of 16%.
Profit-Taking and Future Prospects
These factors suggest a decrease in FOMO, but an increase in greed, which is generally seen as a bullish sign.
A report by Glassnode indicates that profit-taking might be nearing its peak, with a staggering drop from $4.5 billion in December to just $316 million.
The market is showing signs of revival, with greed returning and profit-taking slowing down. This could potentially trigger a new wave of buying, particularly once uncertainty surrounding the Federal Reserve subsides.
The upcoming FOMC meeting could significantly influence Bitcoin’s recovery. With the meeting just a week away, uncertainty is projected to continue, potentially hindering a strong rebound in the short term.
The consolidation period might be a positive sign, possibly allowing institutions to quietly accumulate Bitcoin while the market stabilizes after significant profit-taking.
The actions of the Federal Reserve will be crucial. If rates are cut, the situation could become interesting. However, a surprise move could cause Bitcoin to dip further.
The U.S. economic calendar will ultimately determine whether extreme greed prevails or FOMO returns.