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Crypto market tanks – 5 things to know about BTC this week

Crypto Market

TL;DR Breakdown

  • The crypto market tanks as it waits for the release of the CPI and the outcome of the FOMC meeting
  • Dogecoin plummets on the rumored reports that Elon Musk could release a Twitter coin
  • The crypto community eagerly awaits SBF’s appearance before the U.S. Congress

This week could not be more crucial for Bitcoin and the broader crypto market! The crypto market is currently in the red and will likely remain so for the remainder of the week. In Asia on Monday morning, Bitcoin, Ether, and all other non-stablecoin top-10 cryptocurrencies, barring Litecoin, declined marginally. Tuesday, 08:30 EST, will see the release of the Consumer Price Index (CPI).

Crypto market sees a tough week ahead

For the fourth time this year, inflation and interest rate forecasts will be adjusted. Tuesday will see the release of the November consumer price index, an important inflation indicator. On Wednesday, December 14 at 14:00 ET, one day later, the Federal Open Market Committee (FOMC) will have its final meeting of the year.

In general, there is a simple base case scenario: if the data are better than predicted, risk-on assets such as Bitcoin will appreciate. If the CPI falls short of expectations, Bitcoin may experience a fresh bear market low. Since November 21st, the Total Crypto Market Cap has risen. Despite the rise, it was unable to retake the $830 billion resistance zone.

The last rejection occurred on December 5. It formed a long upper wick and lowered the crypto market capitalization. In addition, Dogecoin, the largest “meme coin” in terms of market capitalization, dropped more than 9 percent overnight.

Crypto market tanks - 5 things to know about BTC this week 1
Source: CoinMarketCap

DOGE generated the third-most liquidations in the preceding twenty-four hours, following Ethereum and Bitcoin. As a result of persistent rumors that Elon Musk would incorporate the crypto into Twitter, substantial gains at the end of November have yet to be eroded by accumulated losses.

Currently, the crypto market value of Dogecoin is $11.7 billion, with a 24-hour outflow of around $1.15 billion. Notably, the eighth-ranked cryptocurrency by market cap was valued at $12.85 billion on December 11. Here are more crypto market indicators to look out for this week.

The CPI print forms a new focus

Everyone is thinking about the Consumer Price Index (CPI) this week. With two weeks remaining until the end of the year, the likelihood of a risk asset “Santa rally,” for example, is still in limbo. In addition, FOMC Chair Jerome Powell will deliver a speech that market analysts will study for indications of a shift in policy.

Whether the CPI is rising or falling, its release tends to cause crypto market volatility, with calm only returning after the rates decision and accompanying statement by Powell.

According to CME Group’s FedWatch Tool, the current consensus forecasts a modest 50-basis-point increase in interest rates this month, signifying a comedown for the Fed in what could potentially become a crucial policy turning point.

The Kobeissi Letter, a financial analysis site, also referred to this week as the “biggest week of the year” but issued a caution to investors.

The U.S. dollar teases recovery

Trader Bluntz, eagerly awaiting a reversal in trend for the U.S. dollar, cautioned that Bitcoin may possibly give a gloomy conclusion to the year. The U.S. Dollar Index (DXY), which has been under pressure for weeks, has begun to establish higher lows on daily timescales, possibly paving the stage for a rebound in dollar strength.

Due to inverse correlation, this would bode doom for the crypto market. A previous piece on December 5 predicted that the $15,000 threshold would be surpassed in the first quarter of next year.

Experts warn of a prolonged crypto market winter

Crypto market analysts believe that something will result in a market crash in the crypto sector. Inflation hit a record high of 9.1% in June 2022, although it has since decreased to 7.7%. In addition, one analyst suggested that investors focus on cash and utilize it as a hedge against the decline in stock prices.

“I’d prefer to have my money in Benjamins than in Facebooks,” he continued. In the meantime, analysts predicted that Bitcoin’s value might plummet to $8,000 due to the FTX collapse.

SBF’s Congress appearance

Bitcoin and Ethereum have lost 1.4% and 2.2%, respectively, over the past 24 hours. The market price of the industry’s largest cryptocurrency is currently slightly under $17,000, while the price of Ethereum is $1,246.

Sam Bankman-Fried of FTX and Alameda Research is slated to appear before the House Financial Services Committee on Tuesday to explain how his cryptocurrency exchange crashed last month. In a conversation with House Chairwoman Maxine Waters last week, SBF said the following.

I still do not have access to much of my data — professional or personal. So there is a limit to what I will be able to say, and I won’t be as helpful as I’d like. But as the committee still thinks it would be useful, I am willing to testify on the 13th.

SBF

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

Florence Muchai

Florence Muchai

Florence is a crypto enthusiast and writer who loves to travel. As a digital nomad, she explores the transformative power of blockchain technology. Her writing reflects the limitless possibilities for humanity to connect and grow.

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