Bitcoin reversed its overnight gains retreating towards the $92,000 level during this Thursday’s trading session in the United States. Paul Howard, senior director at trading firm Wincent, suggests that this choppy, sideways behavior could generate a scenario of benefit for altcoins in the short term. The market appears to be settling into a holding pattern as liquidity typically thins towards the annual close.
The leading cryptocurrency erased its previous advance towards $94,000, continuing with oscillating price action following the week’s sharp moves. Meanwhile, Ethereum held relatively stable, losing only 0.7% and changing hands above $3,100. On the other hand, assets like XRP, Hedera, and Zcash led the day’s losses with drops ranging between 4% and 5%.
Despite the recent pullback, Bitcoin’s technical structure shows signs of strength by holding above established key support. Howard highlights that a higher floor has been set over the past seven days around the $85,000 level. Likewise, the lack of major new macroeconomic headlines suggests that trading will remain within the current range for the rest of the month.
Will December’s low liquidity spark a new alternative season?
The current environment of low liquidity and higher volatility is historically favorable for digital assets with smaller market capitalization. Analysts observe that if Bitcoin fails to break out strongly to the upside, speculative capital could rotate seeking better returns. Thus, there is real potential for outperformance to shift towards the alternative token sector in the coming weeks.
Paul Howard emphasized that cryptocurrency prices continue to show a close correlation with global macroeconomic events and the economy. December is typically a reduced volume month, which can exacerbate price movements in both directions without the need for massive fundamental catalysts. Therefore, traders must be prepared for sharp swings while the market seeks to define its direction for the start of next year.
On the macroeconomic front, investor attention now shifts towards international central bank decisions. Mark Connors, chief macro strategist at Risk Dimensions, points out that the Bank of Japan’s rate decision is the key event of the month. The future of the yen-funded carry trade depends directly on whether the institution keeps rates stable or decides to adjust them.
How will the Bank of Japan’s decision impact global liquidity?
If the Bank of Japan decides to keep interest rates unchanged, as some strategists expect, demand could reactivate. Connors explains that a stable policy would provide a favorable tailwind for risk assets, including Bitcoin and gold. Furthermore, this would alleviate pressure on investors who borrow in yen to buy higher-yielding assets in other markets.
The interplay between global monetary policies and the crypto market remains a determining factor for price action. If global liquidity is maintained or improves thanks to decisions in Japan and the United States, the bullish scenario could strengthen. Finally, stability in interest rates is crucial to avoid liquidity shocks that could derail the current recovery.
In conclusion, although Bitcoin faces immediate technical resistance, the general landscape offers tactical opportunities in other segments of the digital market. The combination of solid support at $85,000 and the possibility of favorable monetary policies keeps hope alive for a positive annual close. Investors will closely watch support levels and the reaction of alternative currencies to the leader’s stagnation.
