The 50-day moving average provided support throughout Bitcoin’s technical decline. After the Santa Claus rally fizzled, Bitcoin’s price dropped more than 12% from its monthly peak of $94,830. Due to investors and dealers being in the holiday spirit, the retreat had a low volume. On Sunday, December 29, the volume of Bitcoin fell to $22 billion from $41 billion the previous day. Volume increased to $45 billion on Friday from $33 billion the previous day. The daily volume of Bitcoin exceeds $100 billion under normal market circumstances.
Bitcoin Struggles After Fed Policy Shift
Bitcoin plummeted after the Fed’s tough monetary policy meeting this month. It cut interest rates by 0.25%, although its dot plot showed only two cuts. Fed suggested four cuts in 2025. Bitcoin faltered as ETF inflows plummeted and Strategic Bitcoin Reserve suspicions fell. Polymarket odds of Trump creating these reserves in 100 days are 29%, down from 60% in November.
History suggests Bitcoin may not gain much in January. Six times, BTC has been positive since 2023. January’s increase was 0.62% and 39% a year earlier. February was a strong month for Bitcoin, down only twice. The January Effect, in which financial assets appreciate in January, is common in stock markets. Application to cryptocurrencies like Bitcoin is unclear.
Mixed January results for Bitcoin
Some years have seen positive Bitcoin returns in January, but the evidence is uneven. Bitcoin has gained in six of eight January since 2023. The average growth throughout these good months has been modest. Bitcoin has fluctuated throughout January. Bitcoin has generated positive returns six times since 2023, including 0.62% in January 2024 and 39% the year before. Despite this, Bitcoin’s performance has been volatile, and January is famously uncertain owing to Federal Reserve policies and market fluctuations. The January Effect, when stocks rise, makes predictions difficult. What this means for Bitcoin is unknown.
Bitcoin Key Support or Bearish Signal?
According to the daily chart, Bitcoin is currently near a critical support level, which may indicate further advances in the upcoming weeks. At the 50-day moving average, it has discovered support. Furthermore, the coin has been unable to dip below the rising trendline that links the lowest fluctuations since November 17th. Still, there’s a chance that the coin has created a widely-recognized bearish pattern—a rising spreading wedge. Consequently, further decline, possibly reaching $73,777, its March high, could be indicated by a decrease below its bottom side.
Summary
The January Effect may have little impact on Bitcoin’s price, but other factors will certainly have a more significant say in where the cryptocurrency’s value goes. Before making any financial decisions on Bitcoin, it is vital to do a comprehensive study and consider different elements. Volume increased to $45 billion on Friday from $33 billion the previous day. Bitcoin’s price is significant. The daily volume of Bitcoin exceeds $100 billion under normal market circumstances.
