Bitcoin (BTC), the largest cryptocurrency, experienced a pullback to $43,350 after peaking at $44,300 on December 20th due to a decline during the U.S. stock market trading session, particularly a 1.42% drop in the S&P 500. Since then, Bitcoin has rebounded, approaching the $44,000 threshold once again. Analysts consider the retreat in U.S. stocks a delayed correction due to overbought market conditions and the expiration of certain options that could lead to selling pressure, yet they view the pullback positively.
Following the decline in U.S. stock markets, which impacted Bitcoin’s value, the leading cryptocurrency recovered during the Asian trading session, nearing the $44,000 level again. Current data shows BTC has risen by 2.26% in the last 24 hours, trading at $43,826.
Altcoins like Solana‘s SOL and Avalanche’s AVAX, which were affected by Bitcoin’s downturn, saw significant increases during the recovery. SOL surged over 10% reaching above $85, while AVAX climbed over 9% surpassing the $45 mark.
The cryptocurrency market has been on an uptrend due to anticipation of a U.S. spot Bitcoin ETF approval and excitement over the historical bull runs associated with the April 2024 block reward halving.
Despite the rise from buying pressure, some observers believe the market needs to cool down. Indications of a cooldown in current market metrics are expected after the rally since November, with lower volatility anticipated as the holiday season approaches. Rachel Lin, CEO and co-founder of Synfutures, noted that Bitcoin and Ethereum have been consolidating near their recent highs, with their Relative Strength Index (RSI) metrics cooling down. Bitcoin’s weekly RSI has decreased from 82 at the beginning of the month to 75, suggesting a potential setup for a new rally, which could also indicate a preparation for a rally in altcoins.