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Support CenterNewsBitcoin Holds above $60K after Fed Taper Announcement and Other Cryptocurrencies (altcoins) Increase while BTC Stalls
Bitcoin Holds above $60K after Fed Taper Announcement and Other Cryptocurrencies (altcoins) Increase while BTC Stalls
2021/11/04 17:51:15



Analysts see further upside despite lower trading volume. Bitcoin traded in a choppy price range on Wednesday as traders reacted to the U.S. Federal Reserve’s plans to taper its $120-billion-a-month in bond purchases. “Despite BTC’s very sluggish performance in recent days, what still draws attention is the apparent support on dips,” Kuptsikevich wrote.


The unprecedented amount of buying by the Fed as part of its monetary stimulus plan known as quantitative easing (QE) provided a tailwind for financial assets, such as cryptocurrencies, deemed by the market to be risky. But lower liquidity as a result of the tapering could encourage investors to reduce their exposure to crypto and other risks. 


Bitcoin’s price fell by about 5% during the announcement by the Fed’s policymaking Federal Open Market Committee in its post-meeting statement, but buyers were quick to step in around the $60,000 support level.


Analysts remain bullish on cryptocurrencies, but some have pointed to declining trading volume as a sign of slowing upside momentum in prices.


“We haven’t even seen an episode of FOMO (fear of missing out) yet, so the sharpest bull-run part of the rally is yet to come,” Alex Kuptsikevich, an analyst at FxPro, wrote in an email to CoinDesk. “Despite BTC’s very sluggish performance in recent days, what still draws attention is the apparent support on dips,” Kuptsikevich wrote.


Trading volume in the bitcoin spot market continued to decline despite bitcoin’s price rally over the past month. The chart below shows the seven-day average BTC trading volume, which is down almost $1 billion from the previous week, according to data compiled by Arcane Research. But some analysts expect higher trading activity if BTC rallies through the end of the year.


“The trading volume has decreased substantially since bitcoin hit an all-time high on October 20, and it should increase considerably if bitcoin is to challenge its all-time high again soon,” Arcane wrote in a Wednesday report.


Trading has also been relatively quiet on the Coinbase crypto exchange over the past week, with BTC accounting for 21% of total volume. However, the company noted that trading activity is starting to increase in alternative cryptocurrencies (altcoins) as bitcoin’s price stalls.

(Article Courtesy of Coindesk)

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