- Digital assets rebounded on Tuesday after significant declines the previous day.
- Myriad prediction market users now estimate a 9% chance of a crypto winter, down from 30% last week.
- Bitcoin remains about 27% below its record high of approximately $126,000 set in early October.
- Ethereum showed a 7.3% gain amid the upcoming Fusaka upgrade.
- Key market factors include upcoming interest rate decisions by the U.S. Federal Reserve and the Bank of Japan.
As Winter Storm Chan approaches New York, traders on the prediction platform Myriad are lowering the odds of a crypto winter. The platform’s users currently give a 9% chance that the market will enter such a downturn, a sharp drop from 30% at the start of last week. This shift coincides with a rebound in crypto prices after a decline lasting more than six weeks.
On Tuesday, Bitcoin (BTC) was trading above $91,500, marking a 6% increase over 24 hours but still remaining about 27% below its all-time high of over $126,000 reached in early October, according to price tracker CoinGecko. Ethereum (ETH) traded around $2,990, up 7.3% since the previous day. The Ethereum community is scheduled to release the Fusaka upgrade on Wednesday, which will significantly alter how the mainnet processes data from layer-2 networks. Ethereum’s price is down more than 20% over the past month.
The definition of a crypto winter in this context requires meeting at least three of the following four criteria: Bitcoin falling to $35,000; Ethereum dropping to $1,000; MicroStrategy (MSTR) stock falling to $50; or total crypto market capitalization dropping to $350 billion on TradingView. A crypto winter is a prolonged period of market decline, reduced trading activity, and diminished investor interest lasting months or years.
The last significant crypto winter spanned from late 2021 through most of 2023. It was triggered by the end of the pandemic-era bull market and intensified by events including the collapse of Terra/Luna in 2022, the failure of hedge fund Three Arrows Capital in June, and the bankruptcy of crypto exchange FTX in November 2022. During this period, Bitcoin’s price fell from nearly $69,000 to around $16,000, a drop of roughly 75%.
Recent price weaknesses in Bitcoin and Ethereum have been partly attributed by analysts at QCP Capital, a Singapore-based trading firm, to hawkish signals from Bank of Japan Governor Kazuo Ueda. They noted that Japan’s two-year yield reached 1%, signaling a 76% chance of a rate increase at the central bank’s December 19 meeting, as stated in their insights.
Market participants are also monitoring the upcoming interest rate decision from the U.S. Federal Open Markets Committee, which is expected to be crucial for determining Bitcoin’s year-end trajectory. Details of the meeting are available on the Federal Reserve’s calendar.
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