Morning Crypto Report: Is Shiba Inu (SHIB) Worth Holding in December? XRP Holds Steady Above $2 Amid Market Fear; Bitcoin Poised for a Santa Rally

As December begins, the cryptocurrency market exhibits behavior reminiscent of late 2021, though it’s now influenced by a different financial landscape. With easing monetary policy and decreasing inflation, market prices seem to have already factored in expectations for future economic cycles. In this context, Shiba Inu (SHIB) poses the question of whether to hold or sell, particularly in light of Bitcoin's performance. XRP, despite a rough week, maintains crucial support at $2. Key levels for Bitcoin will determine whether a December rally is possible.

Key Takeaways

The crypto market is acting similarly to late 2021, despite changes in U.S. monetary policy.
Shiba Inu (SHIB) experienced volatility, with recent gains quickly erased; its future performance depends on Bitcoin’s strength.
XRP's price has held firm above $2 despite the overall downturn in the market, indicating a psychological support level.
Bitcoin is currently at a crucial point; its ability to reclaim and close above the daily Bollinger mid-band may influence the market's direction for December.

The initial week of December reflects crypto market trends reminiscent of late 2021, characterized by a downturn before the broader equities market took notice. However, the current economic scenario differs due to U.S. monetary policy easing and a deceleration in inflation. Yet, market prices suggest they might have preemptively integrated future cycles even before they begin.

The gap between expectations and reality contributes to fragile market sentiment, causing rebounds to appear fleeting. This week saw various narratives shift repeatedly, leading to a decrease in risk appetite across the board, affecting everything from SHIB to Bitcoin.

At the start of the week, there was significant optimism surrounding SHIB, which had surged approximately 12% in the preceding weeks. The momentum, however, dwindled over the weekend, with the price almost entirely reverting to $0.0000084—the point where bullish discussions had initially begun. SHIB’s past performance in December raises doubts about its potential for gains since this year marks the only December where it has made substantial strides.

This discrepancy in market sentiment hints at growing anxiety about macro expectations. The market currently acts as though the easing phase of monetary policy is entirely priced in, leading to compressed cycles and diminishing patience in speculative trading. Consequently, assets like SHIB don’t receive the support usually needed for a sustained rally.

SHIB Price Chart Source: CryptoRank

The critical question for SHIB in December—whether to hold or sell—leans toward cautiously selling unless Bitcoin can break through its mid-band. Historical patterns indicate how risk assets can crumble when anticipations overshoot reality, a scenario we are witnessing again.

However, SHIB has the potential to rebound swiftly if Bitcoin shows robust performance, as meme coins are closely linked to Bitcoin, especially in periods of market fear.

In contrast, XRP has demonstrated a different type of volatility this week. Despite recording the weakest performance in the top 10 cryptocurrencies with a decline of 7.24%, it has steadfastly held onto the $2 crucial support level. This resilience is more significant than the week’s performance metrics because it highlights the market's sentiment during uncertain economic conditions, where rounded levels serve as psychological anchors.

Multiple factors may have contributed to this stability, such as the $230 million in ETF inflows this week or the $897 million accumulated since launch. It could simply be that holders are unwilling to let go of the $2 threshold, which represents more than mere price metrics.

XRP Price Chart XRP/USD by TradingView

Drawing parallels to the situation in 2021, it’s essential to note that crypto markets often turned downward months before the S&P 500. XRP finds itself in a similar position, where overestimated macro expectations could lead to repeated tests of its critical support levels.

The fact that XRP has not dipped below $2 even during a week of selling pressure indicates a defensive positioning among traders who are currently prioritizing stability instead of capitulation. The $2 mark thus becomes pivotal: if lost, market sentiment could undergo a reset; if maintained, any upward movement from Bitcoin may induce a favorable spillover effect for XRP.

Bitcoin now stands at a decisive juncture for December's trajectory. The daily Bollinger mid-band is a crucial resistance level overhead, and Bitcoin is currently positioned beneath it. If Bitcoin can reclaim this level and close a weekly candle above it, it could open the path toward $94,300.

Failure to do so could redirect market attention toward $84,400 as a primary target, leading the conversation in December to center around damage control rather than a seasonal rally.

This situation becomes even more acute when considering stock market signals. Bloomberg’s Mike McGlone has highlighted that the next 5% move in the S&P 500 carries significant implications: an upward trend would align with consensus expectations, while a downward turn could indicate a historic valuation drawdown comparable to nearly 12% of GDP—a scenario reminiscent of past economic stress periods.

Bitcoin Price Chart BTC/USD by TradingView

This dynamic directly impacts Bitcoin as well. Historically, cryptocurrency tends to decline before equities, driven by the high-beta nature of these assets, which respond to expectations faster than their more stable counterparts. If the S&P falters, Bitcoin will likely follow suit, especially as it remains under its mid-band resistance. Conversely, if the index holds steady, Bitcoin could harness its technical structure for a solid December breakout, as reclaiming this mid-band remains a crucial missing piece.

Additionally, macroeconomic risks introduce another factor to consider. The presence of prominent corporate holders like MicroStrategy amplifies volatility; if equities fall, their leveraged exposure could become a significant pressure point, not just due to liquidation risks but also in relation to market perception.

As we reflect on the circumstances surrounding this potential bear market, parallels to past cycles are evident. The patterns observed in 2021, marked by early breaks in the crypto sector compared to equities, underscore the swift pace of the current cycle.

The upcoming Federal Reserve meeting carries the potential for another reset of inflated valuations and compressed phases, suggesting that the markets may need to recalibrate their expectations in light of actual economic policy.

Morning Crypto Report: Is Shiba Inu (SHIB) Worth Holding in December? XRP Holds Steady Above $2 Amid Market Fear; Bitcoin Poised for a Santa Rally

Key Levels to Watch Next Week:

Bitcoin needs to reclaim the daily Bollinger mid-band to engage in potential bullish movements.
XRP's ability to maintain the $2 level will be vital for sustaining market sentiment.