Bitcoin settles below $60,000; $56,500 is the short-term market floor

Bitcoin settled below $60,000 after its recent falls, during a weekend in which the price drew a new range, between this resistance level and $56,500 as a short-term market floor, despite a one-month low at $55,700 on November 19th. Investors are preparing for a week of lower volume in the trading markets, due to the Thanksgiving holiday in the US. They are also closely watching the impact of inflation on consumers' purchasing power and the election of the Federal Reserve (Fed) chairman.

As for the price action, technical analysis suggests that the correction is still on course, "pierced by the $57,855 support of Bitcoin futures," commented José María Rodríguez, analyst at Bolsamanía. "Bounces aside, it would seem that the next major control zone below is in the range of $52,000-$53,000. This is where important support levels converge," he explained.

However, there is evidence that $56,500 is a market floor in the options market for now, where there was no mass liquidation of positions, despite the 19% drop in price from the all-time high at $69,000, as CoinTelegraph analysts commented.

"Emotions and sentiment are driving the market at the moment and the Cryptocurrency Fear and Greed Index fell 22 points to 52/100, marking a neutral level. A week ago, this figure was at an extreme greed level, a typical first indicator of an overheated market," explained Alejandro Zala, Bitpanda's country manager in Spain. In addition to the other factors mentioned, Zala argued that "the fall seems to be related to the excessive leverage of the system, part of which has come out. In any case, the fundamentals did not change, suggesting that the medium-term outlook remains bullish."

As for the other cryptoassets, the red prevails on Monday and the behavior is similar to that of Satoshi Nakamoto's creation. Ethereum consolidated below $4,300, while the market capitalization seeks stability at $2.5 trillion.

Traders' mood this week will be set by the US Thanksgiving holiday, which will reduce trading volumes, and the election of the new Federal Reserve (Fed) chairman, whom US President Joe Biden is expected to announce imminently. The announcement could have implications for cryptocurrency industry regulation and monetary policy, although some experts say the two leading candidates - current Chairman Jerome Powell and Fed Governor Lael Brainard - are so similar in their monetary policy positions that the election may not make a big difference.

Finally, investors who follow Bitcoin as an inflation hedge will also be looking for signs of how holiday shoppers are responding to the fastest consumer price hikes in three decades. This is especially true as supply chain bottlenecks hamper deliveries of some items and discourage retailers from offering deep discounts.