Bitcoin price enjoyed a wonderful 40% rally in January as traders anticipate a turn in events. BTC price peaked at $23,282 last week, marking a 5-month high despite FTX contagion continuing to affect market sentiment.
Bitcoin price is currently trading at $22,888 and it has been trading sideways for the past two days. The 24-hour low and high for bitcoin are $22,387 and $23,056, respectively. While analysts expect bitcoin price to reach $25,000 this month, the rally may not happen.
5 reasons why the price of Bitcoin (BTC) is unlikely to reach $25,000
Here are the reasons why the bitcoin rally is probably over and the BTC price may not reach $25,000 this month.
1. Tightening of monetary policy by the European Central Bank
The European Central Bank plans to raise interest rates by 50 basis points at the next two meetings in February and March. ECB President Christine Lagarde reiterated the need for further tightening and revision of interest rate hike targets to bring down inflation.
Meanwhile, the Economic Affairs Committee of the European Parliament is voting on a bill that would require banks offering crypto services to hold more capital to manage risks from crypto assets.
2nd Federal Reserve FOMC meeting
The US Federal Reserve will announce a rate hike at the next FOMC meeting on February 1st. While the CPI and employment data signal a smaller rate hike, economists expect another 50 basis point rate hike. Investors may have to wait a little longer for the Fed pivot.
According to the CME FedWatch Tool, the probability of a 25 basis point rate hike is 97.2%. The reading is down from the last day as investors await fourth-quarter GDP data due on Thursday.
Bitcoin price stabilizes below $23,000 ahead of ECB and Fed rate hike decision. Therefore, traders are unlikely to make a decision ahead of these events.
3. US Dollar Index Volatility
The US Dollar Index (DXY) will continue to show volatility ahead of the importance week. The DXY is currently hovering near below 102 and is likely to bounce higher ahead of the US Federal Reserve’s rate hike decision.
A rise in the DXY will send Bitcoin price lower and cause a correction in the broader crypto market. In addition, recent policy decisions by Japan and the European Union have weakened the US dollar and the Fed will most likely prevent this.
4. The Bitcoin Fear and Greed Index crashes
The Bitcoin Fear and Greed Index is neutral at 50. The index has been falling for the past few days as traders anticipate a decline in the Bitcoin price on the possibility of profit taking and sell the news strategy.
While BTC price is in an early bull market, traders are unlikely to trade in current market conditions.
5. Bitcoin technical indicators signal strong resistance
Bitcoin price is trading above the 200-day moving average (DMA). Analysts expect a move to 200-WMA which is near $25,000.
On the daily timeframe, Bollinger Bands are breaking out to dampen in the coming days and bitcoin price may drop below $21,500. Furthermore, the RSI is floating in the overbought territory and is likely to turn down. Other indicators are also signaling a drop in bitcoin price.
Bitcoin price on daily time frame. Source: TradingView
also read: Five on-chain indicators are signaling Bitcoin’s entry into the bull market cycle
Varinder is a technical writer and editor, technology enthusiast, and analytical thinker. Fascinated by disruptive technologies, he has shared his knowledge of blockchain, cryptocurrencies, artificial intelligence and the Internet of Things. He has long been associated with the blockchain and cryptocurrency industry and is currently reporting on the latest updates and developments in the crypto industry.
The content presented may contain the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or publication assumes no responsibility for your personal financial loss.
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