After Bitcoin (BTC) hit a yearly high of $21,095 on Jan. 13, where is it going?
Currently, Bitcoin is seeing a surge in bullish momentum after the positively perceived Consumer Price Index (CPI) report was followed by a strong recovery across the cryptocurrency market.
Bitcoin’s recent rally is leading to higher volume and social engagement on whether the price is experiencing a false breakout.
Has Bitcoin ended the bear market?
While the market is still technically bearish as of last week, investor sentiment is improving. According to the Fear and Greed Index, a crypto-specific metric that measures sentiment across five weighted sources, investor sentiment across the market has hit a monthly high.
Bitcoin fear and greed index. Source: alternative.me
Bitcoin price is now above the psychologically important $21,000 level and many analysts and traders are giving their opinions on where BTC price could go next.
Let’s examine some of these perspectives.
Bitcoin trading volume remains a concern
Bitcoin price has yet to recover from its pre-FTX levels, but it peaked above $21,095 on January 13 for the first time since November 8, 2022. Despite the strength of the recent rally, some analysts believe bitcoin price BTC needs to remain above $21,000. Support before the current uptrend can be sustained.
According to Glassnode’s review:
“A renewed uptrend that started Jan. 1 took bitcoin to the $18.6k-18.9k levels, but a move to $19k is needed to open a new trading channel from $19k-21k. to claim dollars. Resistance is expected around these levels as Bitcoin faces a medium-term downtrend. If the price fails to break the trend line, we expect a pullback towards the $16,000-17,000 area.”
BTC price versus volume. Source: Glassnode
The missing trading volume of around $18,000 shows the weakness of the current on-chain and centralized exchange (CEX) activity. Higher volume and broader activity appears to be surrounding the $16,000 level, suggesting it is more solid ground than the current price range. Smaller volume around levels above $21,000 could cap Bitcoin’s rally at $21,095.
A bear market rally?
Bitcoin still faces headwinds, including massive layoffs in exchange amid a tightening macroeconomy, legal troubles at Gemini and Genesis, and the potential creation of a crypto-focused U.S. House subcommittee.
Bitcoin still faces headwinds, including mass layoffs in a struggling macroeconomy, Gemini and Genesis legal troubles, and the potential creation of a crypto-focused U.S. House subcommittee.
Additionally, Bitcoin’s Relative Strength Index (RSI) is currently showing BTC as overbought. According to the RSI analysis, a strong downtrend could form if the price corrects.
Bitcoin RSI. Fonts: TradingView
The macro markets are also at major resistance levels. The US Dollar (DXY) Index is a key support, meaning risky assets like Bitcoin could see a sell-off if the index recovers. Bitcoin remains correlated with stocks and the SPX mini futures index is also showing signs of a pullback.
TraderSZ explains below:
$BTC – huge resistance here…dxy at key support…ES looks like it might pull back a bit, eth in macro midrange…was only up all week so might see some take profit/pullback…arrow would be my trigger IF it’s after Plan pic.twitter.com/6JziAmBywH goes
— TraderSZ (@trader1sz) January 12, 2023
As Bitcoin investors take profits as suggested by TraderSZ, BTC may struggle to reach higher levels.
Historical analysis points to Bitcoin bottom
Bitcoin is currently below its 200-week moving average, and according to independent market analyst Rekt Capital, bitcoin price may already have bottomed out based on historical data. Historically, the “Death Cross” level has bottomed out at $23,500.
A few months later, #BTC has fallen to the macro bottom as historical $BTC death-cross price tendencies dictate
According to these principles, the general bottoming area starts at $23500 (green)#Crypto #Bitcoin https://t.co/85DjLHoZnD pic.twitter.com/iTbCV1CxG3
— Rekt Capital (@rektcapital) January 13, 2023
While traders and technical analysts are not known for accurately predicting how long a bull or bear market might last, independent market analyst HornHairs cited historical data from 2015 to estimate how long it will take for Bitcoin to hit a new all-time high .
The 2015-2017 bull market lasted 1,064 days, which is equivalent to the 2018-2021 bull market, which lasted the same number of days. If traders equate the bear market that started between 2017 and 2018 and 2021 with the current market, it would take Bitcoin 1,001 days to set a new all-time high.
$BTC #Bitcoin
Bull market 2015-2017: 1064 days
Bear market 2017-2018: 364 days
Bull market 2018-2021: 1064 days
2021-*current* market low: 364 days
Days left to the top if we just copy the cycle timeframe again: 1001 days pic.twitter.com/KoNZxJRuy5
— HornHairs (@CryptoHornHairs) January 12, 2023
Despite the current conditions and the strength of the current price drop, Bitcoin has historically proved many technical analysts wrong. Risk-averse traders might consider looking for increased trading volume at higher prices as an indicator that Bitcoin is finally back in a bull market.
The views, thoughts, and opinions expressed herein are solely those of the authors and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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