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.
Related Reading | Kraken CEO Says Bitcoin Below $40k Is A Buying Opportunity
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.
Related Reading | TA: Bitcoin Spikes Higher, Why Bulls Could Aim Larger Increase To $52K
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