Bitcoin holds near $20,400 as analysts highlight its recent stability

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(Kitco News) – The broader crypto market trended negative on Monday following last week’s explosive price action for several tokens – including Dogecoin (DOGE) – which remains up 108% on the weekly chart following Elon Musk’s purchase of Twitter and widespread speculation that it popular meme coin may soon be integrated with the social media platform.

Stocks showed a similar pattern of weakness to start the week, but still managed to close the month of October in the green as investors from around the world await several highly anticipated announcements from the Federal Reserve later this week, including a decision on the size of the next rate hike.

Data from TradingView shows that an early morning attempt by bulls to push Bitcoin (BTC) higher was solidly rebuffed by bears at $20,840, leading the price to pull back to a daily low of $20,245 before gains managed to bid it back above the support of $20,400.

BTC/USD 4-hour chart. Source: TradingView

As it stands now, there is an “initial price uptrend in place on the daily bar chart,” according to Kitco senior technical analyst Jim Wyckoff, who added that “bulls continue to have the overall near-term technical advantage suggesting the path to least resistance for prices will be sideways to higher in the near term.”

A survey of crypto Twitter shows that the prevailing sentiment is positive, especially considering the fact that as it stands, BTC is set to see a weekly close above $20,000 for the first time in nearly two months.

But before you go all in, it would be wise to consider warning offered by market analyst and Eight Global founder Michaël van de Poppe, who highlighted the possibility of “a correction tomorrow or Wednesday before the actual FOMC event takes place,” and suggested that after some volatility after the announcement, “the party and relief rally continues. “

Bitcoin shows increased stability

Insight into how the traditional investment world currently views Bitcoin was offered by Mohamed El-Erian, President of Queens’ College, University of Cambridge, and Chief Financial Advisor at Allianz, who now believes that the cryptosphere is showing significantly more stability than that. had previously.

In a conversation with CNBC Squawk Box co-host Andrew Sorkin, El-Erian agreed that Bitcoin is now going through a classic cycle of innovation where the market is now “ending in tears” after a boom marked by overconsumption and overproduction.

“If you are one #crypto hen you should welcome the relative stability we’ve seen over the past two months,” says @elerianm #bitcoin. “#crypto can and should survive as part of the payments ecosystem…it just needs to be better regulated.” pic.twitter.com/CyVUSNwHfw

— Squawk Box (@SquawkCNBC) 31 October 2022

El-Erian then went on to say that what comes next is reinforcement. “If you’re a crypto fan, you should welcome the relative stability we’ve seen over the past two months. It suggests we’ve shaken out a lot of the excess in the market.”

He concluded by saying, “Crypto can and should survive as part of the payments ecosystem, and as an asset class it just needs to be better regulated.”

Weakness in the financial markets

Overall, both crypto and traditional markets struggled in trading on Monday as traders await this week’s Federal Open Market Committee meeting and the decision on a rate hike.

The S&P, Dow and Nasdaq ended the day in the red, down 0.75%, 0.39% and 1.03% respectively.

Daily performance in the cryptocurrency market. Source: Coin360

Of the top 200 tokens, the most notable gainers on the day include a 21.63% gain by Chain (XCN), an 8.71% increase for Injective (INJ) and an 8.43% gain for Dogecoin.

The total cryptocurrency market cap is now $1.01 trillion, and Bitcoin’s dominance rate is 38.7%.