Bitcoin returned to its weekly low of $85,500 after undergoing the dreaded “Bart Simpson pattern” earlier Wednesday, in which the price rises rapidly, flattens for a few minutes, then plunges just as quickly to its previous point. The resulting shape on the graphics ends up looking like the head of the famous cartoon character.
The crypto market once again appears to be stuck in the awkward scenario of not being correlated at all with stocks when they are heading up, but having a 1:1 correlation with stocks when things are going south.
Indeed, this morning’s strong rally collapsed alongside the Nasdaq, which began to fall amid waning enthusiasm for the artificial intelligence trade. About ninety minutes before the close, the tech-heavy index is down 1.5%, led by much steeper declines for much of the chip sector.
However, the continued upward trajectory of precious metals is perhaps more frustrating for crypto bulls – with silver rising another 5% to another new record high and gold up 1% and just shy of an all-time high. There was a time when bitcoiners expected BTC to be the asset of choice when the Fed eased monetary policy or as a flight to safety when stocks struggled. Instead, it was gold, silver and even copper that responded to this offer.
The crypto dashboard of the week is not pretty. Bitcoin is 8% lower, ether is 15% lower, solana is 12% lower, and XRP is 12% lower.
Where is the ground?
Bitcoin is likely to range between $86,000 and $92,000, according to Jasper De Maere, desk strategist at Wintermute. He added that since the current consolidation range is seeing high volatility, today’s sudden price movements are not that unusual as traders experience liquidations.
De Maere cautioned against over-reading technical indicators at the moment and expects more profit-taking over the next two weeks, driven by year-end portfolio adjustments and tax considerations. “People are reducing their positions to take a breather…short rallies sell out quickly.”
He expects Bitcoin’s sideways movements to continue until new catalysts, one of which could be the expiration of large options in late December.
Without suggesting a bottom just yet, De Maere said the market is starting to show these signs. “I feel like we are suffering to the max,” he said. “In the short term, I would say we are definitely oversold.”
