"While December is typically a low-liquidity month, we observe a higher floor has been set the past seven days around the $85,000 level," Howard said in a note.
Bitcoin News
Bitcoin reversed its overnight climb to $94,000, dipping back to $92,000 during U.S. hours Thursday, continuing choppy rangebound action after wild moves earlier in the week. Low liquidity in December may cap Bitcoin's recovery rally, but range-bound trading could benefit smaller digital assets.
Ethereum held up relatively well, down only 0.7% on the day and changing hands above $3,100 in the afternoon hours. Among altcoins, XRP, Hedera, BCH, and privacy-oriented Zcash led the downside with 4% to 5% decline.
Despite the pullback, Bitcoin continues to hold well above the support level established around $85,000 earlier this week, suggesting markets may be settling into a holding pattern as liquidity thins heading into year-end. Paul Howard, senior director of trading firm Wincent, said cryptocurrency prices remain closely correlated with global macroeconomic events.
"While December is typically a low-liquidity month, we observe a higher floor has been set the past seven days around the $85,000 level," Howard said in a note. Without major new macro headlines, Howard expects more range-bound trading between $85,000 and $95,000 for the rest of the month.
"There's potential for some outperformance in altcoins, which typically do well in a low-liquidity, higher-volatility environment," he added. Markets are entering December with eyes on the U.S. Federal Reserve and the Bank of Japan.
According to Mark Connors, founder and chief macro strategist of Bitcoin investment advisory Risk Dimensions, the BoJ's rate decision is the key event this month, as it determines the future of the yen-funded carry trade. The carry trade is a strategy where investors borrow in yen to buy higher-yielding assets.
If the BoJ holds rates steady, as Connors expects, it could reignite demand for risk assets and provide a tailwind to equities, Bitcoin, and gold. The macro backdrop will likely determine whether Bitcoin can break above $95,000 or continue consolidating through year-end.
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