Bitcoin and other cryptocurrencies experienced a downturn on Monday, struggling to maintain recent highs. However, industry analysts and traders remain optimistic about the continued momentum behind these digital assets.
Over the past 24 hours, the price of Bitcoin dropped 1% to $37,250. This decline caused the largest digital asset to retreat from its recent peak of over $38,000, the highest level it has reached since the brutal bear market in May 2022. Despite the dip, Bitcoin is still up by more than one-third since early October, signaling a rally that has revitalized the crypto market and led to predictions of a new bull market.
“Failure to build on the growth at the end of last week caused moderate pressure on prices,” commented Alex Kuptsikevich, an analyst at broker FxPro.
Multiple factors continue to provide support for Bitcoin’s gains, including the expectation that U.S. regulators will soon approve the first spot Bitcoin exchange-traded fund (ETF). Such approval is anticipated to bring a fresh wave of investor interest in digital assets. Additionally, the macroeconomic backdrop, which has also boosted the stock market, remains favorable. Traders anticipate that the Federal Reserve will forego further interest rate hikes and potentially lower borrowing costs up to four times next year. This shift in monetary policy should further bolster risk-sensitive investments such as tech stocks and tokens.
Crypto traders maintain a bullish stance, as evidenced by the positive funding rate in Bitcoin derivatives markets. This indicates that the majority of wagers predict a continued increase in prices. Furthermore, analysts point to a strong technical backdrop.
“With the lower boundary now at $36,600 and the upper boundary at $38,300… only a decline below the lower boundary will question the sustainability of the uptrend,” explained Kuptsikevich. “Until then, the prevalence of buying on declines in Bitcoin is very likely.”
While Bitcoin takes a step back, Ether, the second-largest token, experienced a 2.5% drop, falling below $2,050. Smaller cryptocurrencies or altcoins also saw declines, with Cardano down 3% and Polygon slipping 4%. However, memecoins bucked the trend, as Dogecoin gained 2% and Shiba Inu saw a slight increase of less than 1%.