Bitcoin (BTC) begins the Christmas holidays with a bump as BTC’s price tests support at a crucial time.
The last week of 2023 is already seeing volatility — and in the year where BTC/USD is up more than 160%, anything can happen.
What are traders’ expectations for the yearly close?
The Bitcoin chart checkpoint is fast approaching, with price action in a range between $40,000 and current 19-month highs at $44,730.
Looking back at the events of the past 12 months, there is much to be proud of for Bitcoin bulls — huge network growth, repeat all-time highs for mining difficulty and hash rate, as well as an accompanying transformation in miner profitability.
On-chain metrics have also flipped into bullish territory en masse, signaling the chance that the new bull market is still in its early innings.
On the horizon are major events for all Bitcoin and crypto investors — a decision on the United States’ first spot price exchange-traded fund (ETF) and the next block subsidy halving.
At this pivotal point in Bitcoin’s history, Cointelegraph takes a look at the current state of the market and highlights some key topics to focus on in the countdown to the end of the year.
BTC price dices with crux $43,000 level at Christmas
After days of sideways trading, BTC price action finally offered fresh volatility into the weekly close.
A dip to $42,700 on Bitstamp was the result, data from Cointelegraph Markets Pro and TradingView shows, before a modest recovery above the $43,000 mark.
This all played into the roadmap for popular trader and analyst Credible Crypto, who over the weekend forecast a return to that area before Bitcoin’s next leg higher.
“Bids filled, all metrics look fantastic still, send it,” part of his latest commentary on X (formerly Twitter) stated.
“Absolutely primed for the next leg up- hopefully we get one more quick swipe into low 43k's to fill a few more of my bids first.”
— CrediBULL Crypto (@CredibleCrypto) December 24, 2023
Bids filled, all metrics look fantastic still, send it. $BTC https://t.co/qs5UITMXNY
Fellow trader Crypto Ed, creator of trading team CryptoTA, agreed that current levels needed to offer a reversal.
Santa started to offload his bags.....
— Ed_NL (@Crypto_Ed_NL) December 24, 2023
If BTC should be bullish, this is where it should bounce.
If no strong bounce, we go sub 40k in coming days.
Merry Xmas! https://t.co/13A60qM0YZ pic.twitter.com/WL7XwoVhdL
$43,000 is a divisive level; other popular commentators, notably trader Crypto Chase, see it as the point at which bulls are destined to run out of steam in the longer term.
Crypto Chase added to shorts at $43,000 earlier in December, continuing that the upcoming ETF approval should mark the local top before “reality” kicks in.
$BTC plan
— Crypto Chase (@Crypto_Chase) December 11, 2023
1. 3rd drive to close shorts/play a bounce
2. TP the bounce
3. chop ensues as holiday approaches but market holds because of pending ETF approval
4. ETF approval pump, re-open shorts around here
5. liquidity / reality
*not drawn to time scale
*approval price may vary pic.twitter.com/qHpG8FmmeS
As Cointelegraph reported, the idea that approval day will form a “sell the news” event has long been gathering popularity, including among professional trading firms.
“For this reason, we expect topside resistance for BTC in the 45-48.5k region and a possible retracement to 36k levels before the uptrend resumes,” QCP Capital wrote in its latest market update last week.
2023: Bitcoin bounces back in classic style
Looking back at 2023, however, there is no doubt over how far Bitcoin has come.
Since the yearly open, BTC/USD has gained in excess of 160%, with 60% gains in Q4 alone, per data from statistics resource CoinGlass.
Even this month has produced 15% gains so far — Bitcoin’s best December since 2020 — despite not repeating the breakout beyond all-time highs seen at the time.
Coming after its longest-ever bear market, this renaissance has been music to the ears of long-term holders, who, as Cointelegraph reported, have stubbornly refused to sell BTC.
This behavior has endured despite the “up-only” nature of the year’s price performance, with upside tempered by only modest consolidations.
“One of the standout features of the 2023 market has been the remarkably shallow depth of all price pullbacks and corrections,” on-chain analytics firm Glassnode wrote in the latest edition of its weekly newsletter, “The Week On-Chain,” on Dec. 19.
“Historically, periods of bear market recovery, and bull market uptrends for BTC regularly see at least -25% pullbacks from the local high, with many examples exceeding -50%. However, the deepest correction in 2023 closed just -20% below the local high, suggesting that buy-side support, and the overall supply and demand balance has been favourable all year.”
That “favorable” climate has led all Bitcoin investor cohorts back to aggregate profitability, yet as Glassnode notes, this is not so high as to spark mass selling and risk an uptrend breakdown.
Examining the Net Unrealized Profit/Loss (NUPL) metric, researchers showed that profitability currently echoes mid-2019, when Bitcoin saw a mid-cycle high.
“The NUPL metric for each cohort is not yet at euphoric highs, but is also comfortably above the respective cohort break-even level,” they summarized.
At $43,000, meanwhile, BTC/USD remains 37% below its current all-time high.
Macro markets wrap up a year of rate hikes
In a typically quiet holiday week, there is little expected when it comes to macroeconomic volatility catalysts for risk assets.
U.S. markets are not trading for much of the remainder of 2023, with jobless claims the last data print of interest for the year, due on Dec. 28.
Key Events This Week:
— The Kobeissi Letter (@KobeissiLetter) December 24, 2023
1. Markets Closed, Merry Christmas! - Monday
2. Initial Jobless Claims - Thursday
3. Pending Home Sales data - Thursday
4. Crude Oil Inventory data - Thursday
The markets are wrapping up a busy 2023 with a quiet week.
Happy Holidays everyone!
This leaves markets cautiously optimistic for major macro policy changes to come next year. Months of U.S. data have fed the narrative of declining inflation with barely any exceptions.
Now, the Federal Reserve faces the question of when to begin unwinding interest rate hikes — a move known as a “pivot” — and how fast.
As Cointelegraph reported, bets on the move’s timing include as early as next month, while the Fed itself has played down such odds.
Per data from CME Group’s FedWatch Tool, markets remain unconvinced that officials will lower rates at the next meeting of the Federal Open Market Committee, or FOMC, on Jan. 31.
How good do Bitcoin miners really have it?
When it comes to Bitcoin success stories of 2023, nothing arguably tops network fundamentals.
Both hash rate and difficulty have offered a rags-to-riches transformation this year, and the trend shows no sign of stopping with the next halving just months away.
According to data from monitoring resource BTC.com, mining difficulty is due to hit yet more all-time highs at its next adjustment, this not due until early January. The latest adjustment saw nearly 7% added — the fourth-highest uptick of 2023, taking difficulty to 72 trillion.
The same is true of hash rate, as miners deploy ever more processing power amid a surge in profitability.
Revenue collected via transaction fees by bitcoin miners averaged nearly $2,000,000 per day in 2023. This is up 400% year over year. pic.twitter.com/zZjUwy1Gbh
— Jameson Lopp (@lopp) December 23, 2023
The presence of Ordinals inscriptions has boosted fee revenue considerably in the second half of the year — in mid-December, the proportion of their income from fees hit 37%, per Glassnode data.
Some commentators argue that miners are seeking to hoard BTC into the halving, which will immediately cut the reward per block by 50%.
For Glassnode lead on-chain analyst Checkmate, however, there is a sobering lesson amid the apparent miner comeback.
The golden era for accumulating BTC was years ago, he lamented last week, revealing that he bought in at the exact top of the 2017 bull market.
My claim to fame is I bought the exact top of #Bitcoin in 2017. My buy was so bad, that the extra Coinbase fee applied for AUD at the time put my bid above the top tick of the top candle.
— _Checkɱate ⚡☢️️ (@_Checkmatey_) December 23, 2023
My pain hardly compares to that of miners.
Since 2017, mining Difficulty is up 4,130%, and… pic.twitter.com/vN5edmMXuf
Greedy for gains this Christmas
Despite the slower pace of BTC price gains toward the end of the year, the average investor is increasingly guided by a sense of greed.
Related: Price analysis 12/22: BTC, ETH, SOL, BNB, XRP, ADA, AVAX, DOGE, DOT, LINK
This is the final conclusion of the Crypto Fear & Greed Index, the popular sentiment gauge that looks set to round out 2023 at levels seen during Bitcoin’s $69,000 all-time high two years ago.
At 73/100 as of Dec. 25, the Index, which uses a basket of factors to compute the average mindset across the crypto investor base, is firmly in its “greed” bracket.
As Cointelegraph reported, sustainability of the bull market as viewed through the lens of Fear & Greed should not pose a problem just yet. Throughout past price cycles, only readings above 90/100 have market macro market turnarounds.
With November 2021 being a conspicuous exception, the question for hodlers now is a classic one: Is this time different?
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.