Bitcoin has been trending to the downside in the past weeks as investors grew more nervous about the macro-economic outlook. As of press time, BTC trades at $49,072 with a 2% profit in the past day.
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Following the Federal Open Market Committee (FOMC) where the U.S. Federal Reserve Chairman Jerome Powell talked about digital assets and potential changes to the institution’s monetary policies, Bitcoin remains range-bound.
Many traders expected this meeting to trigger a “buy the rumor, sell the news” event, but the no-event thesis, as evidenced by the post-meeting price action seems to have hit right on target. As NewsBTC reported, after the crash that took BTC’s price to the low $40,000, the market is likely to move sideways.
In the short term, $42,000 and $46,000 seem like two critical support levels as over $30 million in bid orders sit around those levels, according to data from Material Indicators. Conversely, there aren’t a lot of ask orders in upper levels until $59,000.
This could suggest a BTC’s price short squeeze could be in the cards as 2021 comes to an end, a historically bullish period for the benchmark cryptocurrency. In that sense, investment firm QCP Capital commented the following:
Our view into this upcoming FOMC and beyond is that the market is less prepared for a dovish-leaning Fed and would be possibly caught by surprise on a sharp move higher in price. We think that a short squeeze into the year-end or early January is very possible.
In case of a short squeeze, QCP Capital believes either Bitcoin finally manages to break above $70,000 into its final bull-run before a bear market, or it fails and returns to levels close to its yearly open near $30,000.
Why Ethereum Could Take The Spotlight If Bitcoin Goes Higher
In this scenario, Bitcoin Dominance could take a dive as altcoins and particularly Ethereum seem likely to outperform the first crypto by market cap, according to QCP Capital. The firm has identified a bullish diverge in ETH’s price 4-hour chart for the Relative Index Strength, and MACD indicators, as seen below.
2022 could be a landmark year for Ethereum as the project gets ready to migrate into a Proof-of-Stake consensus blockchain. The Merge, the event that will combine Eth 1.0 and Eth 2.0, is one of the first priorities for core developers and could mark the dawn of a new era for the network that has attracted a lot of attention from institutions this year alone.
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