Bitcoin and other cryptocurrencies have consolidated gains from a recent rally that propelled most digital assets higher than a month.

Over the last 24 hours, the price of Bitcoin has changed little, and is still hovering around $20,290, according to TradingView. Aside from the largest cryptocurrency, Ether was up 1% at $1,519.19, while altcoins like Solana and Cardano remained slightly above the level. Meanwhile, meme coins are more buoyant, with Dogecoin jumping 13% and Shiba Inu up 4%.

Bitcoin was trading at $20,394 at 10:10am Hong Kong time, down more than 2% intraday, while Ethereum was also down more than 2.7%, trading at the $1,520 level.

Although the short-term picture looks relatively strong, cryptocurrencies generally remain vulnerable to another swing lower.

Bitcoin regained its key price point on Tuesday afternoon, which is $20,000, triggered by the weakness of the US dollar and accelerated by a wave of short sellers (traders who bet against the cryptocurrency) being forced to cover their losses and buy the token.

Source: TradingView

The crypto appears to remain in the $19,000 range but has occasionally moved above that threshold in recent weeks. Whether the value of the token will continue to rise is a matter of people’s guesswork.

While most cryptocurrency users are optimistic that Bitcoin has bottomed out after this year’s brutal market downturn, digital assets are still vulnerable due to the Fed’s monetary policy decision and negative sentiment in the broader markets.

A looming catalyst for markets is the tightening of financial conditions by the Federal Reserve, including what is expected to be the fourth largest rate hike next week. Analysts are anticipating that the Fed’s announcement next week could send Bitcoin trading below the $18,000 level.

Bitcoin’s vulnerability stems from a series of bad economic news, such as inflation data among others, that have been shifting market sentiment lower for several months in the recent past. Despite Bitcoin recovering in price since May this year, the crypto has recently outperformed other assets including stocks, gold, European Euro, Japanese Yen, Chinese Yuan and British Pound. .

Over the past month, Bitcoin’s recent resilience, compared to other assets, could be due to crypto becoming a huge conduit for US dollars in countries struggling with their own currencies. Or Bitcoin’s resilience could be anchored in long-term crypto investors who have remained unfazed amid recent downturns in the US economy.

Bitcoin is holding steady, but it’s not out of the woods yet. The end of the year is packed with macro events that could turn the tide lower, including the midterm elections, inflation reports, Federal Reserve meetings, the effects of the Russian invasion of Ukraine, and a possible spike on the strength of the US dollar.

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