The current trading week started with a local consolidation pause, where the price leisurely explored the range of $36k–$38k. As the BTC/USD price moved, a decrease in trading volumes was observed, and the price gradually slid towards the lower boundary of the channel. These facts indicated a relative parity in the positions of bulls and bears in the BTC market; however, the situation changed dramatically.
Contrary to expectations, Bitcoin held the $37k level, recovered above it, and conducted a retest of the $38k level. Ultimately, the bulls managed to reach the $38.4k mark, and after the sellers' reaction, they maintained the $38k level as a platform for further movement. The current movement in the Bitcoin price is likely caused by certain macroeconomic factors, and we may not see further rallies in the near future.
Fundamental Factors
According to BBG data, November became one of the most successful months for the stock market in history. Considering this, Wells Fargo analysts stated that investor optimism suggests that by the end of 2024, the S&P500 will grow to 4625 points. All these facts are crucial as they allow us to assess investor sentiments based on expectations regarding the Federal Reserve's policy.
Bitcoin is also a beneficiary of such sentiments, and its correlation with SPX has significantly strengthened in recent weeks, as reported by Santiment. Also, today, revised GDP growth data for the United States is released, and according to all forecasts, the U.S. economy will continue to grow until the end of 2023. Taking this into account, along with the BTC and SPX correlation, we can assume yesterday's cryptocurrency rally was partly a premature reaction to this news.
BTC Dominance is Growing
Kaiko notes that over the last 60 days, BTC's correlation with altcoins has significantly decreased. More than 90% of investment inflows directed to crypto products since the beginning of 2023 have been redistributed to BTC. Additionally, Bitcoin's dominance has again increased, reaching 53%.
Despite growing optimism and investment flows, Santiment reports that profit-taking by short-term investors has significantly intensified in the BTC market. There has also been a negative shift in sentiments among long-term investors. However, after a successful breakout of $38k and an update of the local high, significant selling pressure is not expected, as investors will be waiting for further price growth.
BTC/USD Analysis
Buyers endured and patiently outlasted sellers within the range of $37k–$38k, where a parity of positions between bulls and bears formed in recent days. Buyers made an impulsive leap, allowing the BTC price to trade near the $38.1k level, with trading volumes reaching $22.3 billion. Bulls gained the upper hand with the update of the local high and low, and this week, there is no expectation of maintaining upward dynamics due to profit-taking.
Bitcoin confidently settled above $38k and continues its movement towards the next key level, which is near $38.4k–$38.6k. It is important to note that BTC surpassed the $38k level thanks to the impulsive leap. However, the current rise to the $38.4k–$38.6k zone is accompanied by minimal trading volumes, so a pullback of the BTC price to $37.8k–$38.1k can be expected. It is worth noting that the situation may change with the opening of U.S. markets, where a volatile day is expected.
The short-term target for BTC is to form and maintain a platform above $38k, as the experience of recent weeks shows that sellers aggressively attempt to push the price below $38k. A local pullback and consolidation near $38k–$38.2k will be an integral part of the further rally to $40k, which is now anticipated by the entire market.
Conclusion
Bitcoin has made the long-awaited breakout of the $38k level and is moving towards the nearest resistance area of $38.4k–$38.6k. This event will largely conclude the phase of increasing volumes due to profit-taking. However, Bitcoin needs to finish the current trading day above the $38k level. This will be the first signal for the formation of a platform near $38k–$38.3k for further upward movement towards $40k.
