**Bitcoin and Ether Struggle as Prices Remain Steady**
Bitcoin and Ether, the leading cryptocurrencies, are currently experiencing a period of struggle in the market. On Friday, Bitcoin was trading around $48,000, while Ether was trading around $3,800. Both cryptocurrencies have been unable to make significant gains recently.
**Testing a Key Technical Level**
Bitcoin, in particular, is now testing a crucial technical level that has served as a support for the cryptocurrency over the past two years. The price drop has brought Bitcoin to its 55-week moving average, and a decisive break below this level could push it as low as $40,000.
**Short-Term Buy Signal**
Despite the struggles, there is a glimmer of hope for Bitcoin. According to Katie Stockton of Fairlead Strategies, a research firm focused on technical analysis, Bitcoin has recently shown a new short-term buy signal. This signal indicates the potential for a two-week rebound. However, Stockton notes that the overall conviction behind this rebound is low due to other factors that suggest conditions are not oversold.
**Contrasting Performance in the Stock Market**
While cryptocurrencies face difficulties, the stock market is experiencing a different story. Improved sentiments surrounding the resistance to new lockdown measures have led to a surge in the stock market. Wall Street’s main indexes have seen their sharpest three-year increase since 1999. The S&P 500 alone has reached its 69th record close of the year and has gained 28.8% in 2021. The Dow Jones Industrial Average and the Nasdaq have also achieved all-time highs, with gains of 19% and 23% respectively.
**Impact on the Dollar and Bond Yields**
The strong performance of the stock market has also affected other financial instruments. The dollar has fallen to the lower end of its recent ranges as investors opt for riskier assets. Additionally, benchmark 10-year yields have reached 1.56%, the highest since late last month. The demand for US Treasury notes has weakened, particularly with the recent sale of $56 billion in seven-year notes. The focus now shifts to the upcoming US interest rate hikes.
**Awaiting the First Ten Days of the Year Effect**
Traditionally, the stock market experiences a rally known as the “Santa Claus Rally” in the last five trading days of the year and the first two days of the new year. However, the crypto market did not witness a similar rally, leading investors and traders to anticipate a rally in the first ten days of the new year. This anticipation is based on the increased institutional investments in the crypto and blockchain sector, which have boosted confidence and may result in significant price gains and increased volatility.
**Expectations for 2022**
The crypto market has high hopes for 2022, especially for Bitcoin. Many experts believe that the year will bring relief and a possible recovery drive for the cryptocurrency. Some even predict that Bitcoin may reach $100,000. However, the timing of this milestone is uncertain, as it depends on macroeconomic policy shifts and the emergence of regulations throughout the year.
**Altcoins Shine Amidst Struggling Major Cryptocurrencies**
While Bitcoin and Ether face challenges, alternative coins (altcoins) have experienced significant gains this year. Retail investors have been attracted to these alternative coins, diverting their attention and potentially putting pressure on Bitcoin. Nevertheless, many people in the crypto industry remain optimistic about the next year and believe that a rally is on the horizon.
**MicroStrategy’s Continued Bitcoin Purchases**
MicroStrategy, a business intelligence company, has continued to invest in Bitcoin despite its recent price weakness. In December, the company purchased an additional $94 million worth of Bitcoin, bringing its total holdings to 124,000 Bitcoin. Although the cryptocurrency has experienced a decline of 17.5% in the last month of 2021, it is still up 62% for the year. MicroStrategy’s CEO, Michael Saylor, has expressed interest in finding ways to generate yields on the company’s Bitcoin holdings, such as by putting a lien or mortgage against it.
In conclusion, Bitcoin and Ether are currently facing challenges in the market, while altcoins have seen significant gains. The stock market has performed well, but the crypto market is awaiting a rally in the first ten days of the new year. Despite the struggles, many experts have high expectations for Bitcoin in 2022. MicroStrategy continues to invest in Bitcoin and explore ways to generate yields on its holdings.