Bitcoin is currently facing bearish sentiment as the yearly close approaches, with some analysts predicting a dip as low as $10,000. On Wednesday, BTC/USD recovered slightly to reach above $16,600, but remained unpopular among traders due to concerns over a potential retracement in the new year.
Derivatives markets also suggested downside risk, with positive funding rates and a positive long/short ratio for the first time since May, indicating more long positions than short. This, combined with a lack of price rally, could potentially be a sign of a local top and subsequent dump.
Not everyone is bearish on Bitcoin, however. Blockware head analyst Joe Burnett argued that the worst may be over for the cryptocurrency, pointing out that it is still trading around the same price it was in June despite negative sentiment and the decimation of the mining industry. He suggested that a slow ascent may be on the horizon.
In the short term, Bitcoin received some support from a rebound in the U.S. stock market, with the S&P 500 and Nasdaq Composite Index both seeing gains of over 1%. The U.S. dollar, meanwhile, has been consolidating after two straight days of gains.
Overall, BTC/USD has had a difficult year, with a year-to-date drop of around 60%, a 3% decline in December, and a 14.2% drop in Q4. As the yearly close approaches, traders will be closely watching to see if the cryptocurrency can stage a recovery or if it will continue to face headwinds.