Summary
- After a strong October, Bitcoin is down 2.6% on the week.
- The digital currency was met with resistance at the USD $27,000 level amid worsening macroeconomic conditions.
- Crypto analysts believe that investors should prioritise major coins like BTC and ETH during bear markets, regardless of short-term trends.
- Bitcoin will likely be the catalyst for a potential bull run in 2024 thanks to major events like BTC halving and spot ETF approval.
The price of Bitcoin is down 2.6% on the week, with the coin falling below US $27,000 ($42,700) for the first time since the start of October. The slide may take a while to reverse, with several data analysts suggesting Bitcoin’s short-term technical indicators look a little grim. The momentum BTC had been building throughout the month appears to have been quashed, with investors pulling away from the asset amid worsening macroeconomic conditions.
BTC Dominance Continues to Rise Amid Bear Market
The crypto market has been in the doldrums for the best part of two years now after the record-breaking bull run of 2021. In spite of the bearish conditions – both in the crypto sector and other markets – Bitcoin has actually enjoyed a fantastic 2023 to date, up 61%. This is fairly typical of a bear market, as investors consolidate their portfolios into higher-quality, lower-risk assets (BTC and ETH). Such economic conditions innately strengthen Bitcoin’s dominance, but reduce liquidity and make innovative altcoins extremely unappealing to retail investors.
The longer the market continues to bleed, the less investors are compelled to engage with the market, new or returning. With most cryptos now entering their second year of sideways price movement (outside of pillars like BTC) patience is starting to wane.
Crypto analyst Miles Deutscher elaborated in a tweet: “We’re in the most difficult market phase, where time capitulation really starts to set in…We’re entering a pivotal accumulation phase, where every dollar needs to be allocated wisely. ”
BTC Likely to Lead Next Bull Run
Although BTC might trend downwards for now after investors encountered resistance at the $27,000 level, Deutscher believes Bitcoin is the key to the next market reversal. Most of next year’s biggest news revolves around the world’s biggest digital currency – notably, Bitcoin halving and the SEC likely approving spot ETFs. On top of this, it’s possible that broader macroeconomic conditions such as supply chain issues, inflation and rising interest rates will start to improve, giving investors greater appetite for risky assets.
Therefore, Deutscher recommends employing a “top-down approach to the market” and to “prioritise quality first”. This involves steadily accumulating Bitcoin and Ethereum to build a foundation ready to strike during the next market reversal.
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