Bitcoin Stuck in a Narrow Range as Macroeconomic Events Weigh In
Bitcoin’s price continues to trade in a narrow range, with the cryptocurrency market facing constrained activity due to several macroeconomic factors. Currently, Bitcoin is hovering between $86,282 and $87,918 while traders anticipate key market-moving events from Japan and the United States.
The Impact of Japan’s Rate Decision on Bitcoin
The Bank of Japan (BoJ) is expected to raise rates to 0.75% in its December 19 meeting, which poses significant risks for the crypto market. A trend reversal in the yen carry trade could lead to dramatic sell-offs in Bitcoin, as witnessed during past rate hikes. The yen carry trade, a long-standing strategy where investors borrow in yen to invest in higher-yield assets, becomes untenable with rising rates.
During earlier BoJ hikes in 2023, Bitcoin dropped by as much as 30% due to leveraged positions unwinding. Traders are now preemptively selling Bitcoin, preferring caution over being caught in a sharp market downturn.
US Labor Market Adds Uncertainty
The US released delayed labor market data earlier this week, creating further confusion among investors. While unemployment rose to 4.6%, indicating economic weakening, stronger-than-expected job growth muddied expectations of Federal Reserve actions. This duality has left investors anxious, prompting $600 million in combined Bitcoin ETF outflows over two days as institutions moved to the sidelines.
Bitcoin’s Key Support Level to Watch
Bitcoin has dropped closer to its True Market Mean (TMM), which currently stands at $81,500, according to on-chain data provider CryptoQuant. The TMM acts as a psychological and technical support level. If Bitcoin fails to hold above this threshold, a sharp drop is likely. Conversely, breaking $88k resistance could drive a rally toward $94k, as highlighted by analysts like Michaël van de Poppe.
Altcoins and Market Sentiment
The altcoin market saw a slight recovery, with Ethereum (ETH) trading at $2,928, and other major cryptocurrencies like BNB, Solana (SOL), and Dogecoin (DOGE) experiencing minor declines. However, certain low-cap tokens like Midnight (NIGHT) surged nearly 20% following a listing on Kraken, while Morpho rose by 9.3% after its integration with World Chain.
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As markets brace for key macroeconomic decisions and technical levels, traders are advised to stay cautious while keeping an eye on significant support and resistance zones to navigate imminent market volatility effectively.
