Bitcoin maintains higher levels after gaining 40% or more this month, but BTC price correction concerns are not far off.
Bitcoin is making a good start to the end of the month
Bitcoin is starting the last week of January in good form after making its highest weekly close in five months. Despite opposition, the largest cryptocurrency remains in its newfound strength and continues to surprise market participants.
Bitcoin analysts think ‘continuation’ will come
It’s no secret that Bitcoin faces its fair share of doubt, as it only posted 40% gains on the three-week candle. Demands for a major correction and continuation of the bear market have long been public, and some of the more conservative trading voices insist that macro bottoms are yet to come.
However, this inflection point has still not materialized. At the most recent weekly candle close, BTC/USD traded just over $22,700, showing its best performance since last summer. After that, the pair consolidated until Monday and likewise maintained the rebounding ground throughout the week.
‘The lows swept, the juicy highs above would be the perfect time to put in a nice moving flat before continuing up,’ Trader Credible Crypto summed up about the short-term outlook. Trusted Cryptos are characteristic of some of the more uptrends in the market and less concerned with the idea that the whole move could be a relief rally within a broader bearish structure.
Analyst noted good signs
Renowned analyst Michaël van de Poppe said, “Total market cap has exceeded the 200-Day EMA,” referring to exponential moving averages. “It bodes well for crypto as it looks likely to continue,” Poppe said. Between a continuation of $25,000 or a correction to $195,000. Hold above the 200-Day EMA and break the resistance to continue. 200-Day EMA potential entry point.’ made the statement.
cryptocoin.com As we noted, the 200-day EMA was $21,056 at the time of writing. More conservative assessments of the situation focused on currency order book composition, among other things. In its latest analysis, Material Indicators noted that BTC price action has risen and fallen as the main bid liquidity area to and from Binance. Part of the comment was that the ‘BTC buy wall at 20,200 was moved to push the price higher to test the resistance at the trendline’.
Another post doubled down on a previous claim that price action was ‘choreographed’ and paid no attention to surrounding industry news, notably the bankruptcy of crypto lending firm Genesis Trading.
Material Indicators tweeted, “Basically nothing has changed, but BTC is testing resistance at the macro level. Meanwhile, some of the biggest institutions in crypto are heading for bankruptcy. Probably nothing.’ he added.
Macro optimism is back
Macro analysis shows a similar divide among those involved in the crypto markets. With the US Federal Reserve’s latest decision to raise interest rates on February 1, sources are reading the falling inflation in different ways.
Meanwhile, the 2023 World Economic Forum failed to significantly dampen sentiment, despite some crypto opposition. For Dan Tapiero, founder and CEO of 10T Holdings, this is nothing more than a question of how the Fed will respond to the changing tides of risk assets as they loosen monetary policy in the future. He asked his Twitter followers, “How will the Fed react when inflation drops below 0? “It’s been a good long year for BTC ETH gold,” he said.
This position is distinctly different from some other popular approaches, especially last week’s predictions from former BitMEX CEO Arthur Hayes. The Fed’s pivot on rates warned that it will come with serious losses for crypto before the recovery begins. Meanwhile, Credible Crypto sees no reason not to soar in risk assets at the moment.
Meanwhile, the last week of the month includes various potential short-term market triggers in the form of the release of US macro data. These include GDP growth on January 26 and the Personal Consumption Expenditure (PCE) index on January 27.
Support doesn’t show up anywhere
On a related macro note, the fate of the US dollar this week deserves special attention. As the crypto markets rally, the strength of the dollar is collapsing and quickly losing the ground it gained as it rose to two-year highs last year. The US dollar index (DXY) is typically inversely related to risky asset performance, and Bitcoin has shown to be particularly sensitive to large moves.
DXY is currently trading around 101.7 and tested a six-month low of 101.5 for the second time this week. The index’s 200-day moving average has been acting as resistance ever since, after losing as support in late November.
“It doesn’t take much to tell you what’s next, we have the biggest short position the markets have ever seen,” said entrepreneur and crypto commentator ‘Coosh’ Alemzadeh, alongside a chart comparing DXY to Bitcoin and Nasdaq performance over the weekend.
The dollar’s plunge against Chinese bonds has also caught the attention of popular analyst TechDev, who has shown that pushback moves in Bitcoin peaked within a year of breaking a significant level in Chinese ten-year bonds. “New multi-month lows for the US Dollar Index DXY after an excellent rejection in the horizontal support/resistance range and 200-day moving average cloud,” added Caleb Franzen, Senior Market Analyst at Cubic Analytics.
On-chain metrics come off the cliff
Bitcoin is truly in the midst of a renaissance, on-chain data culminating. Multiple classic indicators of Bitcoin market health, compiled by analytics firm Glassnode, are now emerging from capitulation zones. These include the amount of BTC supply held at profit and loss, perhaps unsurprising given the 40% upward move this month.
While net unrealized profit/loss (NUPL) hasn’t fallen as low as the troughs of previous bear markets, it’s currently out of its lowest bound and moving towards better profitability. As Glassnode confirms, this is par for the short-term owner (STH) and long-term owner (LTH) NUPL. The two classes of Bitcoin investors are defined as holdings for less than or more than 155 days, respectively.
MVRV-Z has left the green ‘low value’ zone for the first time since its short rise in early November and also marks its first such move since the FTX debacle. “The MVRV Z-Score has dragged itself out of the green accumulation zone,” Philip Swift, co-founder of trade package Decentrader, said last week.
Bitcoin hash rate
It’s time for another Bitcoin network difficulty adjustment now and this week should maintain current all-time highs. According to BTC.com’s forecasts, the difficulty will increase by about 0.5% in six days.
This would add an incremental cherry on the cake to a mining industry that is already in the midst of major change. Despite the recently low prices, competition among miners has increased this month, putting pressure on those who are unable to keep costs to a minimum.
Glassnode also shows that miners hold less BTC overall compared to thirty days ago. That’s when price increases started happening.
Meanwhile, raw data from MiningPoolStats also brings Bitcoin’s hash rate, an estimate of the processing power dedicated to mining, to all-time highs.
Important developments of the week for crypto money and Bitcoin
Apart from technical analysis, macroeconomic news monitoring is always important for crypto money markets. Important financial developments that will take place between January 23 and January 29 have been announced. These developments are:
- Monday, January 23
- Chinese stock markets will be closed until Friday for the New Year holiday.
- The first hearing of the Genesis bankruptcy protection court will take place. (CET 22:00)
- Christine Lagarde, President of the European Central Bank (ECB), will deliver a speech. (TSI 20.45)
- Tuesday, January 24
- Microsoft’s earnings report will be announced.
- Wednesday, January 25
- Tesla and Fidelity earnings report will be announced.
- Thursday, January 26
- US Gross Domestic Product (GDP) will be released. Expected 2.6% / Previous: 3.2% (TSI 16.30)
- Mastercard and Visa earnings reports will be announced.
- Friday, January 27
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