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Key Takeaways from the Bitcoin and Ether November 2021 Performance

Bitcoin and Ether were both under heavy pressure during November 2021, even though the former was the one more impacted. Prices failed to expand at the October pace, which was in a way expected, given both technical and fundamental factors were no longer favorable.

Based on cryptocurrency rates available at ClickTrades, Bitcoin is trading around $57k, while Ether is at $4.3k, and today there should be a brief debate on what weighs in on valuations, as well as what could happen in December.

Cryptocurrencies can drop even when expectations are bullish

Seasonality is usually favorable for cryptocurrencies during the last three months of a year. Both Bitcoin and Ether extended to new all-time highs in October, showing the pattern seen in the past couple of years has largely been repeated. However, buyers were unable to preserve the gains, a fact that puts the market in a difficult position, as a confluence of factors threatens to derail what many are labeling as the “Santa Claus” rally.

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A rising US Dollar acted as a tailwind

Since the pandemic began, cryptocurrencies were viewed as a proper hedge against inflation and the diminishing purchasing power of fiat money. Both retail and institutional players poured their funds into the crypto space, pushing the global market capitalization close to $3 trillion.

However, the sentiment has been weakening as the US Dollar, the global reserve currency, started to gain momentum against most of its peers. A rising USD acts as a deflationary factor on asset valuations, incentivizing market participants to at least take some returns off the table.

Expectations are that the Federal Reserve will need to act in order to tame inflation, and the only tools available are tapering asset purchases and raising short-term interest rates.

New fears related to COVID-19

For the time being, a new variable is being discounted by the markets. More specifically, the latest coronavirus variant – Omicron, has been sparking fears, leading to weakening valuations. There are still many questions regarding whether vaccines are effective against it,  how transmissible it is, or what its impact on the global economy is going to be.

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Various countries have already imposed travel sanctions, which will weigh in on Q4 figures. The selloff in BTC and ETH are so far contained, but both remain vulnerable in the face of new negative headlines. This is still a market sensitive to news, meaning moves on either side can be exacerbated.

What could happen in December?

Heading into December, seasonality remains favorable for cryptocurrencies when looking back over the last few years. For Bitcoin, a strong breakout above $65k will be necessary to confirm the bullish move might extend higher.

In the case of ETH, $4.6k seems to be the area that can prevent a surge towards $4.8k or even the psychological area around $5k. Both markets are now dependent on news and sentiment swings, at a time when technicals are no longer as favorable as they were at the beginning of the year. As Christmas gets close, volatility should gradually compress until traders get back from the holiday in January.

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James Carr (Australia)

James is a new research writer for Tokenhell. His articles include broker and exchange reviews, guides and news from all over the crypto-verse. Stay tuned for his recent articles.

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