Market Wrap: Bitcoin Stays in Tight Range but Gains Dominance as XRP Crumbles

  • Bitcoin (BTC) traded around $23,310 as of 19:00 UTC (2 p.m. ET), slipping 1.3% over the previous 24 hours.
  • Bitcoin’s 24-hour range: $22,644.56 – $23,672.82 (CoinDesk 20)
  • Derivatives market hints at more volatility ahead.
  • With XRP’s sell-off, bitcoin’s dominance of the crypto market increases.

Bitcoin prices, Dec. 23 – Dec. 24, 2020.
Source: CoinDesk

A mere $1.2 billion worth of bitcoin changed on the eight exchanges tracked by the CoinDesk 20, the lowest level in 10 days.

Bitcoin volume on the eight CoinDesk 20 exchanges, December 2020
Source: CryptoCompare

The relative quiet of the holiday season could potentially give way to some downside at the start of the new year, according to technical analyst Katie Stockton, managing partner at Fairlead Strategies.

“Bitcoin is digesting its gains in a consolidation phase after having confirmed its breakout to new all-time highs with its mid-month push higher,” said Stockton. “Former resistance near $19,500 is now initial support. Overbought conditions have not had an impact on momentum,” she said, though that is “perhaps more likely in January, which appears prone to risk-off positioning as it pertains to other asset classes.”

Traders borrowing to buy bitcoin may also end up endangering prices in the not-too-distant future, according to analyst Alex Krüger.

“The crypto market became extremely levered up since the $20K breakout, and implied volatility spiked higher as traders repriced,” Krüger said. “High leverage translates into weaker hands and makes price vulnerable to large corrections. That is why we have been seeing such large two-way price moves since. This is normal given such market dynamics. In such conditions negative news would have an outsized market impact.”

A hint of what’s to come – as early as Friday – may also be found in the derivatives market.

“We will witness the largest expiry in Deribit’s history tomorrow [Dec. 25] as 86,000 option contracts will expire with a notional…

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