FOMC Meeting and Christmas will take Crypto off pause

Cryptocurrencies Cryptocurrencies Cryptocurrencies represent nearly counterfeit-proof digital currencies that are built on blockchain technology. These can be obtained using cryptography or virtual currencies.Cryptocurrencies constitute decentralized networks, harnessing blockchain technology that crucially are overseen by a central authority. This makes cryptocurrencies unique in their function, placing them effectively outside the sphere of influence from any government or central bank.Such digital currency stems from encrypti Cryptocurrencies represent nearly counterfeit-proof digital currencies that are built on blockchain technology. These can be obtained using cryptography or virtual currencies.Cryptocurrencies constitute decentralized networks, harnessing blockchain technology that crucially are overseen by a central authority. This makes cryptocurrencies unique in their function, placing them effectively outside the sphere of influence from any government or central bank.Such digital currency stems from encrypti Read this Term avoided strong moves over the weekend. Bitcoin failed to significantly move away from its 200-day moving average and Ether from the $4000, leaving short-term traders in limbo.

The capitalisation of all cryptocurrencies has barely changed in the past 24 hours, remaining at 2.26 trillion. The cryptocurrency Fear and Greed Index is gradually recovering, rising to 28 (fear) against a low of 16 on Saturday morning. But as we can see, the state of extreme fear has not pushed key coins over the red lines.

Bitcoin saw demand last week on intraday declines below $48K.

Buyers support prevented it from getting below a critical technical level. But we are alarmed that the bulls managed to push the rate only slightly higher. If the bulls surrender this defensive line, a mighty avalanche of liquidation of marginal long positions is likely. If that happens, we expect volatility to spike to a magnitude similar to what we saw on the first Saturday in December and earlier in September and May.

ETHUSD is hovering around $4000, and bounces from that level are getting lower in December.

So far, Ether has withstood the sellers' onslaught, defending the round level and the September highs area. However, a fifth consecutive week of declines is lousy publicity for cryptocurrencies. The key demand drivers are still speculative expectations of price growth rather than company performance as in shares.

Investors in the two major cryptocurrency coins have paused to assess the situation. They are waiting for meaningful signals for a continued bullish trend or the start of a bear market Bear Market A bear market is defined as a financial market in which prices are falling or are expected to decline. This designation is most commonly used in the stock market, though can also be applied to other markets as well, including real estate, foreign exchange, commodities, etc.A bear market differs from periodic declines in assets by virtue of its duration, not frequency. For example, a bear market will typically see extended periods during which large numbers of stock share prices are falling over A bear market is defined as a financial market in which prices are falling or are expected to decline. This designation is most commonly used in the stock market, though can also be applied to other markets as well, including real estate, foreign exchange, commodities, etc.A bear market differs from periodic declines in assets by virtue of its duration, not frequency. For example, a bear market will typically see extended periods during which large numbers of stock share prices are falling over Read this Term. The markets seem to be lacking new drivers for a strong bullish rally in the major cryptos.

This week, financial market attention will be focus on the Fed meeting, and cryptocurrencies could come off pause if the Central Bank's comments elicit an unequivocal market reaction. Investors should also note that Bitcoin often makes strong moves around Christmas.

This article was written by FxPro’s Senior Market Analyst Alex Kuptsikevich.