The traditional and cryptocurrency markets saw a large sell-off last week as the longest U.S. government shutdown continued to wreak havoc with investors. The shutdown has affected the usual economic data releases (jobs, trade, manufacturing, and interest rates) and has continued to create uncertainty in these markets. Market sentiment did reverse somewhat later in the week as some of the major coins rebounded, but the sell-off mentality remains with retail investors. Some institutional investors and whale buyers bought the dips, buying over 1.4b USD worth of Ethereum.
U.S. Fiscal Tensions Rattled Investors
The crypto market at the time of writing breathed a sigh of relief as the U.S. Senate agreed to pass a spending bill to alleviate the pressures of the shutdown. This has created a renewed buying sentiment in both markets and has seen positive rallies. The reopening of the U.S. government would release much-needed economic data and should bolster the markets in the coming days.
More significantly, the Senate Agricultural Committee has drafted a bill that would define what digital commodities are. This would protect on-chain developers and infrastructure builders, as in the past, these operators were considered financial intermediaries. The new draft would stipulate that these software innovators are not brokers or money transmitters, enabling them to develop without legal repercussions.
A BTC Breakout on the Horizon??
The tentative U.S. shutdown resolution could ignite a bull run on BTC in the coming days if the agreement is ratified, but Bitcoin would have to rise above the 106k resistance level. Analysts agree that reinstating funding would increase consumption and stabilize the airline market ahead of the December holiday season. As a result, the NasDaq saw a bounce of 2.3% on November 11th and pulled the tech stocks up and saw an uptick of BTC about 1.3% but has since pulled back and is trading around 105k USD.
BTC ETFs recorded the 3rd largest outflow in the past week of 1.25b USD. Around 560m USD was on November 7th, a direct result of uncertain macroeconomic policies. Analysts believe that this massive outflow is not a bearish signal but a consolidation period, with institutional investors taking profits. A similar cycle happened last June and BTC rallied from monthly lows of 101k to 123K USD in July. While traders are optimistic about the coming week(s) they remain cautious and all eyes are on institutional investors.
Ethereum Rallies
Ethereum has rallied back after falling to 3K USD last week and is currently trading around 3.5k USD. Whale traders were the driving force behind the ETH recovery as well as Institutional investors. It appears that the bulls are in control as ETH has strong support at 3.4k USD and are targeting the 4.5k USD resistance to increase the run. There has been a large ETH accumulation in the past week by Ethereum treasury corporations such as Bitmine. The company has acquired another 110, 188 ETH in the past week, pushing its total to 3,505,723 tokens for a 2.93% stake of ETH’s total circulation, the top holder of ETH.
There were ETF outflows last week, one of the largest on record, around 510m USD, but has slowed considerably and the funds are starting to recover.
Dogecoin Gains Momentum
Many analysts are optimistic that Dogecoin will pump in the coming weeks. After the massive sell-off on October 11th, the meme coin hasn’t really recovered but is currently in a consolidation phase. The DOGE ETF is being fast-tracked in the U.S. and the apparent launch date will be November 6th. DOGE is currently trading at 0.1773 USD (up almost 8% for the past week) and many traders believe that the coin may surge to 0.23-0.283 USD after the launch. The meme coin sector has been bullish lately and this token will lead the way but headwinds on the macroeconomic front could stall this rise.
Whales Drive LTC Price
Litecoin had some impressive on-chain numbers last week despite the sell-off in the rest of the market. LTC was 82 USD and rose 20% from November 7th and is currently trading at 102 USD. The altcoin’s trading volume is up 191% (1.8b USD) in the same period. Much of the uptrend can be attributed to whale accumulations as more than 6k wallets over 100k USD have bought over 15b USD of LTC in the past 3 months.
Some bullish analysts expect LTC to hit 120 USD by late December because of increased investor sentiment and network usage and reach levels seen last October.
The cryptocurrency market seems to be consolidating and much of the liquidity in the market is sitting on the sidelines in stablecoins. Some analysts see the idle stablecoins as a detriment to the market. But traders remain cautious until BTC and ETH resume their surge; they need to see positive macroeconomic news before they can start buying again. There is speculative news that the U.S. will ease monetary policy in December, and this could be the catalyst that drives a new bull run.
