Bitcoin
and other cryptocurrencies edged lower Wednesday as the digital asset space—which has been propelled higher in this year’s fourth quarter, faced down an absence of catalysts into the end of 2023.
The price of Bitcoin has fallen less than 1% over the past 24 hours to below $42,800, having reclaimed $43,000 for the first time in a week on Tuesday but remaining below 20-month highs above $44,000 seen in recent weeks. The largest digital asset has still gained more than 50% since mid-October, the biggest leg of a crypto rally this year that ended months of subdued trading and sparked calls of a new bull market.
“Trading activity is subdued … with Bitcoin/U.S. dollar volume on Bitfinex 60% of its 30-day average,” Stéphane Ouellette, CEO of crypto adviser and capital markets platform
FRNT Financial,
wrote in a Tuesday note.
Even as Bitcoin bounced back on Tuesday, trading volumes were subdued, pointing to muted activity into Wednesday. Cryptos face few catalysts into the end of the year—before January could usher in a new round of volatility—so choppy trading and periods of profit-taking are likely.
The dominant force behind Bitcoin’s rally has been anticipation that U.S. regulators will soon approve the first spot Bitcoin exchange-traded fund (ETF), which is expected to usher in a fresh wave of investor interest. That narrative could be rejuvenated by administrative developments, as was seen after BlackRock updated its own ETF filing late Monday. But the decisive catalyst will likely not come until a Jan. 10 deadline for the Securities and Exchange Commission to decide on an ETF from ARK and 21Shares.
The macroeconomic backdrop, too, has helped cryptos, with Bitcoin gaining alongside the
Dow Jones Industrial Average
and
S&P 500
amid increasing expectations that the Federal Reserve will cut interest rates multiple times next year. But the coming weeks sees an absence of major macro data or central bank decisions—save some inflation data due Friday—adding to the overall dearth of catalysts that could meaningfully move token prices.
Beyond Bitcoin,
Ether
—the second-largest crypto—fell 2% to $2,200. Smaller tokens or altcoins were also weaker, with
Cardano
down 1% and
Polygon
slipping 2%. Memecoins were also in the red, with
Dogecoin
dropping 3% and
Shiba Inu
shedding 2%.
Write to Jack Denton at [email protected]
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