Bitcoin Reversing overnight gains to $94,000, the U.S. dollar index fell back to $92,000 during Thursday’s U.S. session, continuing to trade range-bound after an initial sharp decline, compared with gains earlier in the week.
Ethereum’s Ethereum It performed relatively well, falling only 0.7% on the day, and changed hands above $3,100 in the afternoon. Among altcoins, Ivy(HBAR), and privacy-focused Zcash It fell 4% to 5%, while the broad market CoinDesk 20 index fell 2%.
Trading shocks ahead
Paul Howard, senior director at trading firm Wincent, said in a report that despite the pullback, BTC is still well above the support level around $85,000 established earlier this week, suggesting that the market may slip into a holding pattern as liquidity becomes thinner at the end of the year.
“We continue to see cryptocurrency prices closely correlated with global macroeconomic events,” said Paul Howard, senior director at Wincent. “While December is typically a lower liquidity month, we have observed a higher floor being set over the past seven days at approximately $85,000.”
Barring no new big macro news, Howard expects trading to range between $85,000 and $95,000 for the rest of the month. “Altcoins have the potential to outperform and generally do well in low-liquidity, high-volatility environments,” he added.
All eyes are on Japan
On the macro front, since December, the market has focused on the Federal Reserve and, more importantly, the Bank of Japan (BoJ).
Mark Connors, founder and chief macro strategist of Bitcoin investment advisory firm Risk Dimensions, said the Bank of Japan’s interest rate decision is the “key event” this month because it determines the future of the yen-funded carry trade, a strategy in which investors borrow Japanese yen to purchase high-yielding assets.
If the Bank of Japan keeps interest rates steady, as Connors expects, it could reignite demand for risk assets and provide a boost for stocks, Bitcoin and gold.