Bitcoin (BTC) Starts New Week With New Highs For 2023, Still Divisive After Furious Price Rally.
In what is becoming the antidote to last year’s modest decline, January delivered the volatility Bitcoin bulls were hoping for, but can it hold up?
This is an important question for market participants entering the third week of the month.
Opinions remain divided on the fundamental strength of Bitcoin. Some fully believe that the march to two-month highs is a “rally of suckers,” while others are hoping the boom will continue, at least for the time being.
Beyond market dynamics, there is no shortage of potential catalysts waiting to assert their sentiments.
US economic data will continue to be released, but corporate earnings could bring new volatility to stock markets this week.
Cointelegraph has spotted five potential BTC price moves as all eyes focus on new support levels and the fate of Bitcoin’s bear market.
Analyst Admits BTC Price Will Consolidate
Bitcoin faces mounting skepticism after passing several major resistance levels over the past week.
As Cointelegraph reported, the consensus remains skewed to the bearish side for the long term, and few believe the current momentum will be anything more than a bear market rally.
Bitcoin sees strong signs of a downside as new $12,000 macro low warnings are still on.
The weekly close is in line with what it was just before the FTX demise, and at the time of writing, BTC/USD is still above $20,000, hitting a new local overnight high of $21,411, according to Cointelegraph Markets. Shown by Pro and TradingView data.
Volatility still persisted, with movements of hundreds of dollars on hourly timeframes being common. The momentary plunge below $21,000 at the time of writing explained As a “liquidity hunt” by commentator Tedtalksmacro.
Analyzing the levels it would hold in the event of a broader retracement, the on-chain analytical resource material indicator identified a 21-week moving average (MA) of $18,600.
“Additional $11M bid wall set up to defend Bitcoin 2017 top spot.” I got it Along with additional charts in the Binance orderbook.
“Holding above that level is symbolic and increases the chances of extending the rally, but IMO holding the 21-week moving average is critical for a sustained rally. TradFi said on Monday is closed for MLK Day, volatility continues.”
previous post Added That whale activity actually helped boost the exchange market.
Meanwhile, trading account Stockmoney Lizards aiming to reverse FTX losses called Because of the “little (lateral) integration” at the current level.
Michael van de Poppe, founder and CEO of trading company Eight, said: Said That bitcoin could actually consolidate as a result of changes in the strength of the US dollar.
The US Dollar Index (DXY) reached 107.77, trading near its lowest level since early June 2022.
Shifting focus to earnings as a catalyst for equities
The week should get off to a strong start on the macro front with Producer Price Inflation (PPI) data due out on January 18th.
This comes amidst various speeches by the Federal Reserve, but stocks could be swayed by another phenomenon in the form of this week’s corporate earnings report.
As Bank of America strategists noted in last week’s note, the S&P 500 has become particularly earnings sensitive, even overtaking traditional data releases such as the Consumer Price Index (CPI) in terms of impact.
As quoted by news outlets such as CNBC, “We see this as a shift in the market narrative from the Fed and inflation to corporate earnings. and the reaction to the FOMC meeting is dwindling,” they wrote.
The strategist referred to the next meeting of the Fed’s Federal Open Market Committee (FOMC), which will decide on a rate hike on February 1.
These are now expected to be the lowest since early 2022, with sentiment favoring a 0.25% increase, according to CME Group’s FedWatch tool.
Ram Alwalia, CEO of Lumida Wealth Management, a digital asset investment advisor, wrote, “The lower the Fed’s funding, the more liquid the system will be.” research last week.
The attached chart shows what Ahluwalia suggested is a beneficial relationship between the Fed’s interest rate drop and Bitcoin liquidity.
He went on to refer to veteran economist Larry Summers’ appearance in the mainstream media on January 13th. Larry Summers made positive statements about cooling inflation.
“Larry said the Federal Reserve’s fight against inflation was ‘far, far nearing the end’. This is a ‘positive surprise’ for putting assets at risk and supports the Fed’s pivot camp,” he argued.
“BTC Benefits from QE Hypothesis: One of the Big Macro Desks Listened and went Long Bitcoin.”
GBTC winning streak continues
On the topic of recovering institutional profits, another chart tracing FTX’s overall losses is the largest Bitcoin institutional investor, Grayscale Bitcoin Trust (GBTC).
As of January 13, the latest date for which data is available, GBTC shares are trading at a discount to net asset value (NAV) of 36.26%, according to Coinglass data.
Previously positive and known as the ‘GBTC premium’, this discount has been rising since the end of December and is now higher than at any time since the FTX meltdown.
The highest ever reading reached 48.62% just before that as Grayscale suffered as part of parent company Digital Currency Group’s (DCG) own FTX troubles.
That controversy continues to rage and is often public, but GBTC has the most promising results in months.
Meanwhile, behind the scenes, Grayscale continues to fight US regulators over its refusal to allow GBTC to be converted into an exchange-traded fund (ETF) based on Bitcoin’s spot price.
extensively twitter update On January 13th, Grayscale Chief Legal Officer Craig Salm repeatedly referred to the company’s “commitment” to winning the lawsuit and launching the first Bitcoin ETF on the US market.
“Again, converting GBTC into a spot Bitcoin ETF is the best long-term way to track the value of BTC,” he summarized.
“Our case is progressing quickly, with strong, common sense and compelling legal arguments, and we are optimistic that the courts will rule in our favor.”
Difficulty hits all-time high
If Bitcoin’s price recovery wasn’t enough to excite the bulls, its network fundamentals tell a promising story as well.
In line with the near-weekly results, network mining difficulty increased by more than 10%, marking its biggest rise since October last year.
The move has obvious implications for Bitcoin miners, suggesting that the ecosystem is already benefiting from higher prices.
As Cointelegraph reported, miners had already slowed sales of BTC reserves in recent weeks, but the increase in difficulty reflects the return of competition to the sector over block subsidies. .
However, over the past week, miner balances have declined in response to the sharp rise in Bitcoin’s price. According to data from on-chain analytics firm Glassnode, it hit a one-month low at 1,823,097 BTC as of January 16.
Nevertheless, the difficulty wiped out FTX’s response, hitting an all-time high in the process.
“Bitcoin is in the process of retesting the estimated average cost of production for miners,” Glassnode added. I got it Last week before most of the profits came.
“Exceeding this level will provide much-needed relief to miners’ income,” it added.
The accompanying chart shows a unique “difficulty regression model”, which it describes as “the estimated total production cost of Bitcoin”.
Whales buy big bucks, sentiment out of ‘fear’
It’s no secret that the average Bitcoin hodler is experiencing much-needed relief this month, but is it a case of unbridled euphoria?
RELATED: 5 Altcoins That Could Breakout If Bitcoin Price Remains Bullish
According to the age-old ruler, The Crypto Fear & Greed Index, it may be “too much, too soon” when it comes to changing mood around Bitcoin price strength.
On January 15, the index hit its highest level since April last year, and while it’s not yet “greedy,” the move marks a significant shift from just a few weeks ago.
As Cointelegraph reported, the crypto market spent most of 2022 in the lowest “extreme fear” bracket, which was not helped by FTX.
The score is now above 50/100, dropping slightly into the new week to remain in “neutral” territory.
For Santiment, a research firm that specializes in gauging the mood of cryptocurrency markets, there is one key factor that will influence Bitcoin’s newfound strength.
answer that I have written A Twitter post over the weekend solidly lies about whale activity.
Over the 10 days leading up to January 15th, whales large and small added to their positions, setting off a chain reaction of supply and demand in the process. In total for that period, they bought him 209,700 BTC.
Santiment called the data “the definitive explanation for why cryptocurrency prices soared.”
The views, thoughts and opinions expressed herein are those of the authors only and do not necessarily reflect or represent the views or opinions of Cointelegraph.