Bitcoin has returned to its weekly low of $85,500 after suffering the dreaded “Bart Simpson pattern” early Wednesday, in which the price quickly rises, stabilizes for a few minutes, and then just as quickly falls back to its previous position. The resulting shape in the graphics ends up looking like the head of the famous cartoon character.
The cryptocurrency market again seems to be stuck in the problematic scenario of not being correlated at all with stocks when they go up, but having a 1:1 correlation with stocks when things go south.
In fact, this morning’s strong rally unraveled along with the Nasdaq, which began to decline amid a further decline in enthusiasm for AI trading. About ninety minutes before the close, the technology index is down 1.5%, led by much steeper declines in much of the chip sector.
Perhaps most frustrating for cryptocurrency bulls, however, is the continued steep upward trajectory of precious metals, with silver up another 5% to another new record and gold up 1% to just shy of an all-time high. There was a time when bitcoiners expected BTC to be the asset of choice when the Federal Reserve eased monetary policy or as a flight to safety when stocks were in trouble. Instead, it is gold, silver and even copper that capture that supply.
The leaderboard of the week in crypto is not pretty. Bitcoin was down 8%, ether down 15%, and solana and XRP down 12%.
Where is the ground?
Bitcoin is likely to remain stuck in the range between $86,000 and $92,000, according to Jasper De Maere, desktop strategist at Wintermute. He added that because the current consolidation range is experiencing high volatility, today’s sudden price movements are not that out of the ordinary when traders suffer sell-offs.
De Maere cautioned against over-reading technical indicators at this time and expects further profit taking in the next two weeks, driven by year-end portfolio adjustments and tax considerations. “People are reducing positions to take a breather…short-lived rallies are selling off quickly.”
Expect Bitcoin’s sideways moves to continue until new catalysts occur, one of which is possibly the expiry of large options at the end of December.
While not yet suggesting a bottom, De Maere said the market is starting to show those signs. “I feel like we’re suffering the most,” he said. “In the short term, I would say we are definitely oversold.”
