• Bitcoin and major coins are low movers during the holiday period.
  • Regulators are exploring crypto regulation and stablecoins.
  • The bitcoin community is getting ready for halving.

The cryptocurrency market has entered a dead period of Christmas and New Year holidays. Even as cryptocurrency markets never sleep and operate in 24/365 mode, traders and investors tend to abandon the scene during major holidays. As a consequence, low, slow activity leads to low volumes and thin liquidity. While usually, the holiday season is a dull period on the markets, unpredictable events may trigger strong price movements. However, all that remains for us is to hope that no bombshell drops on the markets before the liquidity is restored. 

During X-mas week, Bitcoin oscillated in a range limited by $7,700 on the upside and $7,000 on the downside. Recovery attempts have been limited so far, though Bitcoin's market share increased to 68.9% as major altcoins were struggling even more. 

The total capitalization of all digital assets in circulation is registered at $190 billion, unchanged from this time on the previous week. Bitcoin stayed unchanged on a week-to-week basis, while Ethereum and Ripple lost 3% and 2% of their respective values.

It's all about halving

The third halving on Bitcoin's blockchain is scheduled in May 2020; however, the industry has already started getting ready for the event. The forecasts range from collapse to non-event and new historic highs. Those who say that halving will not affect the prices point out that it is totally priced in. Doomsayers are worried about miners exodus. Also, they suspect Bitcoin may follow the same path as Litecoin that lost over 70% of its value after the halving. 

Meanwhile, optimistic forecasts are based on stock-to-flow growth. The indicator shows how many years are required to achieve the current stock at the current production rate. Basically, it reflects the deflationary nature of Bitcoin and provers thee point that the higher the number, the higher the price.

Central banks, stablecoins, and Co.

Central banks and regulators continue exploring the idea of issuing state-backed digital assets. China is leading the pack with its digital yuan. According to the officials, the project is at the final stage will soon be launched in a pilot mode. The government also considers expanding its Forex trading regulation in the cryptocurrency industry to curb capital control violations and prevent manipulations. Beijing revealed the plans to launch digital yuan in the wake of Facebook's Libra project.

Read more details here

Russia is another country that is actively experimenting with stabelcoins. The head of the Russian central bank Elvira Nabiullina confirmed that the regulator had been testing various stablecoins within the regulatory sandbox. However, the governor also repeated its negative stance towards cryptocurrencies and emphasized that they would never be allowed as a means of payment on the territory of Russia. Notably, the country is yet to pass legislation on digital assets. 

The parliament in South Korea will discuss the crypto lay in January. The lawmakers are supposed to follow the guidelines of the Financial Action Task Force (FATF) while developing the South Korean law.

BTC/USD, the technical picture

On the weekly chart, Bitcoin (BTC) is moving within a tight range. Two consecutive doji candles with long opposite wicks emphasize the state of indecision on the market. The price is still locked in the range and we will need to see a sustainable breakthrough in either direction to get the ball rolling. 

From the long-term perspective, BTC/USD stays within the major descending wedge formation. The channel support is now registered at $6,100, while the resistance is created by the sloping trendline at $8,700. 

The first strong support is created by $7,000. The price action confirms the importance of this area and implies that it may tame the bears for the time being. If it is broken, $6,800 will come to the fore. That's where the lower line of the daily Bollinger Band meets Pivot Point 1-day Support 3.  A sustainable move below this handle will trigger new sell orders and push the price towards the above-mentioned channel support.

On the upside, we will need to see a sustainable move above $7,600 for the upside to gain traction. This resistance is created by SMA50 (Simple Moving Average) weekly and daily and the upper line of the daily Bollinger Band. This barrier is going to be a hard nut to crack for Bitcoin bulls. Once they manage to clear it, another strong resistance on approach to $8,000 will come to focus, followed by SMA100 daily at $8,150. 

Both the weekly and daily RSI (Relative Strength Index) remains flat with no signs of upcoming reversal, which means that the coin may continue moving sideways in the foreseeable. future

BTC/USD, the weekly chart

The  Forecast Poll of experts has weakened slightly since the previous week. The expectations on a weekly basis turned from neutral to bearish, while the expectations on monthly and quarterly timeframes remained bullish.  However, the average price forecast on all timeframes is well below 8,000. Notably, the quarterly price forecast deteriorated slightly, which means that the experts are cautious about Bitcoin's long-term perspectives.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

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