Bitcoin (BTC) Begins New Week With BTC Price Action Promising Near Monthly High — Can It Continue?
With new year bullish momentum, BTC/USD is currently surfing at levels not seen since mid-December, with weekly closes providing reason for optimism.
The move comes ahead of a prominent macroeconomic week in the cryptocurrency market, when the December 2022 Consumer Price Index (CPI) is due to be released from the United States.
Federal Reserve Chairman Jerome Powell also gave a speech on the economy, talking about everyone’s eyeball: inflation.
In the crypto space, the FTX contagion continues, with the Digital Currency Group (DCG) at odds with institutional investors over handling solvency issues at its subsidiary, Genesis Trading.
At the same time, internally, Bitcoin is still showing signs of recovery from the FTX turmoil, including miners.
Cointelegraph will examine these factors and more as the second trading week in January begins.
Bitcoin Price Exceeds $17,000
Bitcoin soared at the close of the week of Jan. 9, reaching a level not on the charts since Dec. 16.
According to data from Cointelegraph Markets Pro and TradingView, Bitstamp hit a record high of $17,250.
Despite only adding a few hundred dollars, the BTC/USD move has not gone unnoticed considering the highly compressed trading range over the past few weeks.
Nevertheless, traders were not willing to change their long-term conservative view, seeing the continuation potential.
“Towards and beyond my $17,300 to $17,500 goal,” Crypto Tony told his Twitter followers. update On that day.
“I’ve been making some gains in scalps for a long time here, but as long as I’m below 17,500 in four hours of closing, I’m staying short.”
Similarly, Mikael van de Poppe, founder and CEO of trading firm Eight, is keeping the door open for a modest continuation of the rally, although he said earlier in the week that warned of hurdles.
“We still see incidents like this with Bitcoin,” he said. Verified along with the diagram.
“I think it will continue to rise next week, but will probably drop on Monday due to the Gemini correction.”
Meanwhile, Venturefounder, a contributing analyst at on-chain analytics platform CryptoQuant, urged investors to zoom out.
“Bitcoin is currently stuck between $16,000 and $18.5,000 for two months,” he said. Admitted.
“Watch this range very carefully. A break from either direction could bring 20% volatility and could happen quickly. Support at $18,500 could go to $22,500.”
CPI countdown returns as risky asset traders focus on volatility
All eyes, including the Federal Reserve, will be on the December print inflation data for the Consumer Price Index (CPI) due for release this week.
The CPI, which hits the market on January 12, is a key component of Fed policy, and traders and analysts are keenly aware that the signals it provides could lead to a change in its stance. increase.
The CPI has fallen recently, suggesting that the Fed’s existing rate hikes are having a positive impact on inflation.
If this continues or drops more than expected, hopes rise that the Fed will scale back rate hikes sooner or even stop them altogether.
This provides a window for risk assets, including crypto, to gain as Fed policy easing ignites an appetite for risk.
“Huge volatility is expected. Huge cash positions and light position sizes for me,” said Ted Chan, trader and research analyst at Libya Asset Management. Said Twitter followers describe the CPI event as “a huge week.”
Others noted the unusual timing of the CPI schedule, with the data released two days after Fed Chairman Jerome Powell’s speech on the economy.
“Unfortunately, or fortunately, the speech is on Tuesday and the CPI is on Thursday, so the hawks are undone after Thursday’s CPI figures!” One response readadded that the market’s reaction to Powell’s speech could amount to “noise.”
According to CME Group’s FedWatch tool, there is currently a 75% chance of a 25 basis point rate hike this month, compared to a 25% chance of a significant 50 basis point rate hike.
Longer term, skeptics, including “big short” investor Michael Barry, argue that inflation will pick up, forcing the Fed to raise rates again as a result.
“CPI inflation is unlikely to fall to 2%, much less negative.” response in Barry last week.
“But I agree with you that the Fed will return to quantitative easing and official inflation will hit new highs. Unofficial actual rates will hit a record high.”
DCG publicly faces music
Institutional giant Digital Currency Group (DCG) joins the grill this month as the influence from the FTX narrative continues.
The exposure to FTX has increased pressure on certain DCG subsidiaries in an increasingly complex story, raising questions about the future of even the largest institutional Bitcoin investment vehicle.
Grayscale Bitcoin Trust (GBTC) currently manages over $10 billion in BTC assets. According to Coinglass data, its stock is trading at an implied 44% discount to Bitcoin’s spot price.
As reported by Cointelegraph, exchange Gemini has frozen some of its assets at DCG firm Genesis Trading after suspending withdrawals in light of FTX. I publicly appealed to Barry Silbert for an answer.
On 8 January, in an open letter to Silbert, he gave a deadline for resolving the situation, but Silbert himself contested this as the time had expired.
“DCG submitted a proposal to Genesis and your advisors on December 29, but has not received any response,” he said. claimed Part of a Twitter response to Winklevoss on Jan. 2.
If events take an unpredictable turn, the impact on the Bitcoin market could be more severe, and DCG’s prominence as an investment entity makes the fiasco particularly prominent.
Description In a recent event, Glassnode’s lead on-chain analyst, Checkmate, said the DCG continues to “explode in slow motion.”
“And the price of Bitcoin is basically a stablecoin,” he added.
“At the moment, 2023 is all about DCG,” said Justin Herberger, author of the Invest and Prosper newsletter. weather.
“If they somehow collapse, it will be ugly. This could be the last leg of an 85% drawdown from Bitcoin ATH.”
Miners Break Serious Selling Streak
Bitcoin miners have been a hot topic for most of 2022, but the drop in BTC price following the FTX implosion has exacerbated an already tenuous picture.
Miners have begun selling their stored bitcoins to remain economically viable, and on-chain indicators quickly indicate that a miner “surrender” is already underway. I warned you.
However, as Cointelegraph reported, neither the magnitude nor the duration of the sell matter, and the situation has stabilized recently.
“The intense selling pressure from bitcoin miners that has disrupted the market over the past four months has now calmed down,” said William Clemente, founder of crypto research firm Reflectvity. . wrap up Along with data from on-chain analytics firm Glassnode this weekend.
The data shows a 30-day change in the net positions of Bitcoin miners, and in fact, it has started to increase compared to the previous month.
Separate Glassnode data Supported The observation that miners’ BTC reserves reached a monthly high on Jan. 8.
Focusing on Bitcoin’s hash rate (the estimated processing power dedicated to mining), Jan Wuestenfeld, an analyst at cryptocurrency research and advisory firm Quantum Economics, was equally optimistic about the status quo.
“Despite the huge pressure miners are under, the only minor hashrate corrections in the last two months of 2022 are likely to lead to further increases when considering the 30-day moving average. It’s funny to be here,” he says. I got it.
Last week, Bitcoin’s network difficulty was adjusted downward by about 3.6% to account for less competition among active miners. However, according to BTC.com’s latest predictions, the next adjustment will wipe out those losses and add 9% more difficulty to new all-time highs.
‘Extreme Fear’ Faces Lowest Crypto Trading Volume in 18 Months
Crypto market sentiment remains uncertain when it comes to the short-term outlook, according to the Crypto Fear & Greed Index.
RELATED: Macroeconomic Data Shows Crypto Investor Pain Will Intensify in 2023
Over the weekend, the Index, which compiles sentiment scores from a basket of weighted triggers, returned to the top of the weakest bracket, “Extreme Fear.”
The ‘extreme fear’ of early 2023 will be familiar to longtime market participants after seeing sentiment in the lowest zone of the index last year endure for the longest period in history.
At the same time, interaction with cryptocurrencies appears to be significantly lacking at current price levels.
data Research firm Santiment has the lowest trading volume across all cryptocurrencies since mid-2020.
“Volumes for altcoins are particularly low,” notes the attached chart.
Separate numbers from CryptoQuant with flag Nevertheless, popular social media commentator CryptoBitcoinChris notes that whale sales have also declined since December, which could become a trend and have a “positive effect on market sentiment.” Did.
The views, thoughts and opinions expressed herein are those of the author only and do not necessarily reflect or represent the views or opinions of Cointelegraph.
