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Bitcoin’s volatility gradually cooled above $17,000 on December 5 as traders worried that the US Federal Reserve (Fed) might continue to tighten policy.
Market data shows that Bitcoin was rejected after setting a 3-week high above $17,400. The market leader then turned down and is currently trading around $16,990 with a slight drop in 24-hour trading volume to just $19.11 billion.
A weekly close above $17,000 is very encouraging for the market and is Bitcoin’s highest weekly close since the FTX crash. However, the positive leading crypto asset failed to maintain its momentum after establishing a local top at $17,430.
The reason for the reversal was that investors expressed concern about the Fed’s continued campaign to raise interest rates.
However, many traders are still hoping that the uptrend will resume, towards $20,000, outlining various resistance zones. Michaël van de Poppe, Trader Titan of Crypto, believes that $18,500 is a strong resistance area to watch, while a daily close above $17,167 would be “encouraging”. The signs have also pointed to a classic bottom – an inverse head and shoulders – “with a strong reversal signal” on the 12-hour chart.
However, former Goldman Sachs CEO Raoul Pal is quite confident in the long-term future of Bitcoin. According to him, Bitcoin and M2 Global charts, the available money supply is at a very low level and is showing signs of a strong bounce, when Bitcoin will also increase exponentially.
The altcoin market eases slightly after Bitcoin shows weak recovery momentum. Leading the way down is Celo (CELO) with more than 10% evaporation in the last 24 hours. Other projects such as EthereumPoW (ETHW), Trust Wallet Token (TWT), Nexo (NEXO), Quant (QNT), GMX (GMX), Chiliz (CHZ)… all decreased slightly by 3-5%.
However, there are still some projects showing outstanding performance in the short term. For example, Axie Infinity (AXS) when this project jumped to nearly 20% yesterday. This momentum is believed to come from the strong increase in NFT selling volume. Axie also announced on Monday that it has selected a team of 700 community members to help build the future of the project.
Meanwhile, Ethereum (ETH), the 2nd largest token by market capitalization, failed to break above $1,300 and turned down nearly 2% in the short term. Currently ETH is changing hands around $1,263.
After a period of deflation, Ethereum continues to inflate again because the amount of ETH generated far exceeds the number of coins burned. According to data from ultrasound.money, the amount of Ethereum (ETH) issued, the annual inflation rate has increased to 0.08%. This follows a period of dips below zero amid market volatility due to the FTX crisis. So the increased usage of the Ethereum network resulted in millions of dollars being transacted on-chain.
Market sentiment gradually turned around with negative signals. The Greed and Fear Index (FGI) has steadily declined and has now reached 25 points in the Fear zone.
The US stock market fell sharply in trading on Monday (December 5) on concerns that the US Federal Reserve (Fed) may continue to tighten monetary policy until it pushes the economy into a recession. into recession. Also for this reason, the price of crude oil “evaporated” more than 3%.
At the close, the Dow Jones lost 482.78 points, or 1.4%, to 33,947.1 points. The S&P 500 index fell 1.79% to 3,998.84 points. The Nasdaq index lost 1.93% to 11,239.94 points.
Tesla shares fell 6.4% after news that the electric car company had to cut production at its Shanghai factory. Large-cap tech stocks also fell sharply on growth concerns, with Amazon falling 3.3% and Netflix falling 2.4%. Shares of cloud software company Salesforce slid nearly 7.4% after announcing the resignation of the CEO of Slack – the company that Salesforce bought – to step down.
Purchasing managers (PMI) data for the US service industry in November released by the Institute of Supply Management (ISM) showed that the sector grew better than expected. The report immediately raised concerns that the Fed would continue to raise interest rates, which in turn put downward pressure on stock prices.
In tandem with the slide in stock prices, US Treasury yields moved higher. The 10-year yield was close to 3.59% at the close.
“Obviously, the stock market wants to rally, but that ability depends a lot on whether inflation is kept under control. So whenever there’s any better-than-expected economic data, inflation concerns usually kick in, sending yields up,” said Commonwealth Financial Network’s vice president of investment management and research. , said Mr. Peter Essele.
After last week’s speech by Fed Chairman Jerome Powell, the market had expected the Fed to shorten the rate jump to 0.5 percentage points, instead of continuing to apply the 0.75 percentage point jump like 4 last consecutive meeting. But at the same time, Mr. Powell also said that the maximum rate of this bull cycle may “have to be a little bit higher” than expected at the September meeting. That means the Fed’s interest rates could may have to increase to more than 5%, from 3.75-4% now.
With interest rate worries partially easing, any positive economic data could put downward pressure on the market. On Friday, the US Labor Department released a better-than-expected November jobs report, weakening expectations that the Fed will slow down the pace of interest rate hikes despite recent signs of slowing inflation. heat.
As of last week, US stocks had had two consecutive weeks of gains on expectations that the Fed would shift to a softer stance. But now, the uptrend has become unsteady as positive economic data emerges.
“Today, the market continues to react to Friday’s jobs data. The economy hasn’t slowed much yet, unlike Mr. Powell’s message last Wednesday,” said Drury Capital CEO Bernard Drury, referring to Mr. Powell saying it may be time to come. reduce the rate of interest rate increase.
“We’re going back to being anti-inflationary,” added Drury.
Wall Street investors are betting that the 89% chance of the Fed raising rates with a 0.5 percentage point jump at its meeting next week, and the extreme rate of this bull cycle will be 4.984% by the end of the week. May 2023.
Brent crude oil futures in London fell $2.57/barrel, or 3%, to $83/barrel. WTI oil futures in New York fell 2.67 USD/barrel, or 3.3%, to 77.32 USD/barrel.
“Macro-economic concerns regarding the Fed and what the Fed will do with interest rates are casting a shadow over the market,” said Price Futures Group analyst Phil Flynn.
During the session, there was a time when oil prices increased by about 2 USD/barrel due to support from the OPEC + group on Sunday deciding to keep the production plan unchanged. OPEC+ is an alliance between the Organization of the Petroleum Exporting Countries (OPEC) and a number of non-OPEC allies including Russia.
The market is waiting to see what impact Western sanctions on Russian crude will have. Last week, the Group of 7 developed industries (G7) agreed to a ceiling price of 60 USD/barrel for Russian crude oil transported by sea. A ban on importing Russian crude oil by sea has also been implemented by the European Union (EU) since December 5.
The fact that China has begun to relax some anti-Covid-19 regulations is supporting oil prices. The recent sharp drop in oil prices is partly due to a strong outbreak of Covid in China and the country tightened its blockade.
The world gold price suddenly dropped below the level of 1,800 USD/oz due to the strengthening of the USD because of the concern that the US Federal Reserve (Fed) will maintain the tightening monetary policy longer than expected.
In the session last night in New York, spot gold price dropped 28.2 USD/oz, equivalent to a decrease of nearly 1.6%, closing at 1,770.1 USD/oz.
Gold fell sharply as the dollar bounced back as investors believed the US economy could be strong enough for the Fed to continue raising interest rates aggressively, to a higher peak, and hold there for longer. .
Purchasing managers (ISM) data for the US service industry in November released by the Institute of Supply Management (ISM) showed that the sector grew better than expected. The report immediately raised concerns that the Fed will continue to be tough on monetary policy moves.
Just last Friday, the US Labor Department released a better-than-expected November jobs report – another data that undermined expectations that the Fed will slow down the pace of rate hikes despite recent inflation. there are signs of cooling.
The Dollar Index, which measures the strength of the dollar, closed the first session of the week at nearly 106.3 points, up more than 1.9% compared to the previous session.
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