Bitcoin’s New December Low Opens Doors for Another 20% Lower

The world’s largest cryptocurrency, Bitcoin (BTC), has once again come under heavy selling pressure and cannot find enough catalysts to break above the $17,000 resistance. A few hours ago, the price of BTC hit a new low for the month of December at $16,277.

However, it recovered from the decline and is currently trading at the $16,740 level. The stock market faced turbulence over the past weekend due to macroeconomic factors and other developments in the crypto space.

Market analysts expect further declines in Bitcoin (BTC) price and the possibility of another 20% correction from here cannot be ruled out. Speaking to Bloomberg, Katie Stockton, founder of Fairlead Strategies LLC said:

“We expect a retest of November lows near $15,600 in the coming weeks” after a failed test of levels between $17,000 and $18,000. “We eventually expect Bitcoin to make a lower low, increasing risk for long-term support near $13,900.”

New lows for Bitcoin and Crypto?

The year 2022 has witnessed one of the biggest crypto winters in industry history. Bitcoin is down 75% and the majority of altcoins are down almost 90%. On the other hand, the Fed has made it clear that it will continue its rate hikes throughout the next year 2023.

If so, there is a strong chance of a correction in US stock markets next year. With crypto having a higher correlation with US stocks, we can also expect a further correction in the crypto market. In their latest report, blockchain analytics firm Nansen Research writes:

Given the Fed’s determination to hold tight longer, our key scenario for 2023 is a US recession and a sell-off in US equities. Crypto prices could see another (perhaps final) decline in this cycle before interest rates turn more favorable.

Additionally, crypto exchange Bitfinex explains a slowdown in trading activity this holiday season. “As we approach the end of the year, many companies and traders are taking a break, however, the slowdown in trading activity brings the risk of higher volatility, given the decline in trading volume. and liquidity,” he noted.

Bhushan is a FinTech enthusiast and has a good flair for understanding financial markets. His interest in economics and finance draws his attention to the new emerging markets of Blockchain technology and cryptocurrency. He is continually in a learning process and motivates himself by sharing his acquired knowledge. In his spare time, he reads thrillers and occasionally explores his cooking skills.

The content presented may include the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or publication assumes no responsibility for your personal financial loss.