- Bitcoin has traded sideways around $44,000 as investors brace for volatility from the upcoming SEC decision on a spot Bitcoin ETF.
- Narrowing volatility points to an impending breakout in Bitcoin’s price, whether from approval or denial of the ETF.
- While attention is on the ETF, upcoming US inflation data could also spur short-term Bitcoin volatility.
Bitcoin has traded sideways, around $44,000, as investors brace for volatility from the upcoming SEC decision on a spot Bitcoin ETF. Multiple indicators suggest Bitcoin is ready to break out from its recent rangebound action.
Narrowing Volatility Points To Impending Breakout
Data from TradingView shows decreasing volatility in Bitcoin’s price over the weekend. Markets remain cautious about how Bitcoin will react to the approval or denial of the United States’ first spot Bitcoin exchange-traded fund (ETF), expected by January 10.
The seminal event is predicted to trigger a temporary Bitcoin price retracement in a “sell the news” reaction. Others anticipate a knee-jerk upside move potentially challenging key psychological price levels.
Regardless, indicators point to an escape from the narrow intraday trading range. The Bollinger Bands volatility indicator is tightening on daily charts, a classic sign preceding volatility expansion.
Bitcoin ETF To Overshadow Upcoming US Inflation Data
While attention remains fixed on the ETF, macroeconomic hurdles loom ahead. Upcoming US inflation data in the form of the December Consumer Price Index (CPI) and Producer Price Index (PPI) could spur short-term volatility.
The data will need to show inflation continuing to ease for markets to react positively. This could lead the Federal Reserve to pivot on interest rate policy, though a change is not expected at its next meeting this month.
Bitcoin faces a critical test as the market braces for the ETF decision amid a backdrop of key inflation data. Traders anticipate an expansion in volatility following an extended period of rangebound price action. The coming days will prove decisive in setting the tone for Bitcoin price action in 2024.