Bitcoin (BTC) started the new week on a promising note with BTC price action near a one-month high – can it last?
In a new year boost for bulls, BTC/USD is currently surfing levels not seen since mid-December, with the weekly close giving cause for optimism.
The move comes ahead of a clear macroeconomic week for the crypto market, with the December 2022 Consumer Price Index (CPI) print due from the United States.
Jerome Powell, the Chairman of the Federal Reserve, will also give a speech on the economy, with inflation on everyone’s radar.
In the crypto environment, the FTX contagion continues, with Digital Currency Group (DCG) at odds with institutional clients over the handling of solvency issues at its Genesis Trading subsidiary.
At the same time, under the hood, Bitcoin is still showing signs of recovery from the FTX turmoil, with miners among those catching a break.
Cointelegraph examines these factors and more as January’s second trading week begins.
The price of Bitcoin is over $17,000
Bitcoin could rise higher at the weekly close of January 9th, reaching levels not seen on the chart since December 16th.
Data from Cointelegraph Markets Pro and TradingView shows a local high at $17,250 on Bitstamp.
Despite only adding a few hundred dollars, the move in BTC/USD was ignored due to the highly compressed trading range of the previous weeks.
However, looking at the possibility of continuation, traders are less willing to change their long-term conservative perspective.
“Next and up to the target of $17,300 – $17,500,” Crypto Tony told his Twitter followers on update in the day.
“I have taken profits in my scalp, and stayed short as long as it was below 17,500 at the 4-hour close.”
Michaël van de Poppe, founder and CEO of the trading company Eight, also opened the door to some slight continuation, but warned that the start of the week would be difficult.
“Still watching cases like this in Bitcoin,” he said confirmed along with explanatory charts.
“I think it will continue to rally next week, but there may be a decline due to Gemini or a correction on Monday first.”
Meanwhile, Venturefounder, a contributing analyst at the on-chain analytics platform CryptoQuant, warned investors to minimize.
“Bitcoin has been stuck between $16k and $18.5k for 2 months now,” he said. acknowledge.
“Watch this range very carefully, a break from either direction can bring 20% volatility, it may happen. A definitive break of $16k can see $13k, making $18.5k our support can see $22.5k.
CPI countdown returns as asset traders eye volatility risk
All eyes, including the Federal Reserve, are on inflation data this week with the December printout of the Consumer Price Index (CPI) due for release.
The CPI, which will greet the market on January 12, is a key component of the Fed’s policy, and traders and analysts alike know that the signal it provides could lead to a change in their stance.
Recently, the CPI has fallen, signaling that the Fed’s interest rate hikes have had a positive impact on inflation.
If this continues or even declines more than expected, the hope that the Fed will reduce rate hikes sooner – or even cancel them altogether – will increase.
It also provides a window for risk assets, including crypto, to gain, as the Fed’s policy loosens its appetite for risk.
“Expect huge volatility. Large cash positions and light position sizes for me,” Ted Zhang, trader and research analyst at Revere Asset Management, toward Twitter followers, described the CPI event as a “big week.”
Others noted the unusual timing of the CPI schedule, with the data coming two days after a speech on the economy by Fed Chairman Jerome Powell.
“Unfortunately or fortunately the speech was on Tuesday when the cpi was on Thursday, so there is hawkishness to cancel the cpi number on Thursday!” one response readadding that the market’s reaction to Powell’s speech was likely to be “disruptive”.
According to CME Group’s FedWatch Tool, the odds of a 25-basis-point rate hike this month are now at 75% versus a 25% chance of a big 50-basis-point move.
Long-term, skeptics, including “Big Short” investor Michael Burry, maintain that inflation will return, with the Fed having to raise rates again as a result.
“CPI inflation is unlikely to fall to 2%, let alone negative,” said gold bug Peter Schiff in a answer for Burry last week.
“But I agree with you that the Fed will return to QE and the official inflation rate will reach a new high. The unofficial real rate will reach an all-time record high.
DCG faces music in general
As the fallout from the FTX saga continues, institutional investment giant Digital Currency Group (DCG) comes in for a grilling this month.
The exposure to FTX increases the pressure on certain DCG subsidiaries in an increasingly complex story that has even questioned the future of the largest institutional Bitcoin investment vehicle,
Grayscale Bitcoin Trust (GBTC) currently has more than $10 billion in BTC assets under management. The stock price, according to data from Coinglass, is trading at a 44% discount to Bitcoin’s spot price.
As Cointelegraph reported, the Gemini exchange has frozen some of its assets in DCG firm Genesis Trading after stopping withdrawals in light of FTX. Its founder, Cameron Winklevoss, has publicly appealed to the CEO of DCG, Barry Silbert, for answers.
January 8, he wrote in an open letter to Silbert, marked the deadline for the situation to be resolved, but with time up, Silbert himself this dispute.
“DCG sent the proposal to Genesis and your advisers on December 29 and have not received a response,” he said. admit in part of the Twitter response to Winklevoss on January 2.
If events are unpredictable, the implications for the Bitcoin market could be even more serious, with DCG’s prominence as an investment entity making the debacle apparent.
clarify recent event, Checkmate, the lead chain analyst at Glassnode, said that DCG continues to “blow in slow motion.”
“And the price of Bitcoin is basically a stablecoin,” he added.
“2023 all depends on DCG at this point,” Justin Herberger, author of the Invest and Prosper newsletter, meanwhile forecast.
“If they collapse, it will be bad. This could be the last leg up to 85% of Bitcoin ATH.
Miners break heavy selling streak
Bitcoin miners have been on most radars in 2022, but the BTC price drop that followed the FTX implosion added to an already bleak situation.
Miners began releasing their stored bitcoins in order to remain financially viable, and on-chain metrics quickly warned of the “capitulation” miners had made.
As Cointelegraph reported, however, neither the extent of the sell-off nor the duration seems critical, and recently, the situation has stabilized.
“The heavy selling pressure from Bitcoin miners that has plagued the market for the last 4 months has subsided now,” said William Clemente, founder of crypto research firm Reflexivity. summarized along with data from on-chain analytics company Glassnode this weekend.
The data shows the 30-day net position change for Bitcoin miners, which has actually started to increase compared to the previous month.
Glassnode data is separate supported observations, with BTC miner reserves hitting the highest of the month on January 8.
Monitoring Bitcoin’s hash rate – roughly the amount of processing power dedicated to mining – Jan Wuestenfeld, an analyst at crypto research and consulting firm Quantum Economics, is also optimistic about the status quo.
“It’s crazy how the hashrate level, even though the miners are under severe pressure, has only slightly corrected in the last two months of 2022 and is now increasing considering the 30-day moving average,” he noted.
Last week, the difficulty of the Bitcoin network was adjusted down by around 3.6%, taking into account the drop in competition between active miners. However, according to the latest forecast from BTC.com, the next adjustment will eliminate these losses to increase the difficulty level by 9%, thereby marking an all-time high.
“Too scared” meets 18 months of crypto volume
Crypto market sentiment seems uncertain when it comes to the short-term outlook, according to the Crypto Fear & Greed Index.
Related: Macroeconomic data points to pain for crypto investors in 2023
At the end of the week, the Index, which collects sentiment scores from a basket of weighted triggers, was plunged back into the top of the most bearish bracket, “very scared.”
The first for 2023, “extreme fear” remains familiar to long-term market participants, who saw the longest sentiment in the lowest zone of the Index last year.
At the same time, interaction with crypto seems to be lacking at the current price level.
data from research company Santiment has achieved the lowest transaction volume in crypto since mid-2020.
“Altcoin volume is particularly low,” notes the accompanying chart.
A separate number from CryptoQuant flag by the popular social media commentator CryptoBitcoinChris still notes that the sale of whales has also decreased since December, this has the potential to set the trend and “positive effect on market sentiment.”
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