The ghost of FTX haunts the crypto industry, but Bitcoin is attempting to leave it behind as BTC price gains endure. 3091 Total views 22 Total shares Listen to article 0:00 Markets News Own this piece of history
Collect this article as an NFT Bitcoin (BTC) starts a new week at new 2023 highs, but still divides opinion after a blistering price rally.
In what is shaping up to be the antidote to last years slow bleed to lower prices, January has delivered the volatility Bitcoin bulls were hoping for but can they sustain it?
This is the key question for market participants going into the third week of the month.
Opinion remains divided on Bitcoins fundamental strength; some believe outright that the march to two-month highs is a suckers rally, while others are hoping that the good times will continue at least for the time being.
Beyond market dynamics, there is no shortage of potential catalysts waiting to assert themselves on sentiment.
United States economic data will keep coming, while corporate earnings could deliver some fresh volatility to stock markets this week.
Cointelegraph takes a look at five potential BTC price movers as all eyes focus on new support levels and the fate of the Bitcoin bear market.BTC price due consolidation, analysts agree
Bitcoin has faced increasing skepticism after passing some key resistance levels throughout the past week.
As Cointelegraph reported, the consensus remains skewed to the bearish side long term, with few believing that current momentum will end up any more than a bear market rally.
With warnings of new macro lows of $12,000 still in force, analysts are watching for signs of a comedown. So far, however, this has not materialized.
The weekly close tied with those from just before the FTX collapse, with BTC/USD still above $20,000 at the time of writing, having hit new local highs of $21,411 overnight, data from Cointelegraph Markets Pro and TradingViewshowed.
Volatility remained in action, with moves of several hundred dollars commonplace on hourly timeframes. A flash dip below the $21,000 mark was described by commentator Tedtalksmacro as a liquidity hunt.
Analyzing levels to hold in the event of a broader retracement, on-chain analytics resource, Material Indicators identified the 21-week moving average (MA) at $18,600.
Another $11M bid wall placed to defend the Bitcoin 2017 Top, it noted alongside an additional chart of the Binance order book. Holding above that level is symbolic and increases the probability of extending the rally, but IMO holding the 21-Week MA is critical for a sustained rally. TradFi is closed Monday for MLK Day. Volatility continues.BTC/USD 1-day candle chart (Bitstamp) with 21-week MA. Source: TradingView
A previous post added that whale activity was indeed helping to buoy the market on exchanges.
Eyeing the reversal of FTX losses, meanwhile, trading account Stockmoney Lizards called for a little (sideways) consolidation at current levels.
Michal van de Poppe, founder and CEO of trading firm Eight, said that Bitcoin might indeed consolidate due to changes in flagging United States dollar strength.
The U.S. Dollar Index still traded near its lowest levels since early June 2022 on the day, having hit 107.77.U.S. Dollar Index (DXY) 1-day candle chart. Source: TradingViewFocus shifts to earnings as stocks catalyst
This week will get off to a brisk start in terms of macro data, with producer price inflation data coming on Jan. 18.
This will come amid various speeches from Federal Reserve officials, while stocks will likely be swayed by another phenomenon in the form of corporate earnings reporting throughout the week.
As noted by Bank of America strategists in a note last week, the S&P 500 has become particularly sensitive to earnings reports, with their impact overtaking classic data releases such as the Consumer Price Index.
We see this as a narrative shift in the market from the Fed and inflation to earnings: reactions to earnings have been increasing, while reactions to inflation data and FOMC meetings have been getting smaller, they wrote, quoted by media outlets including CNBC.
The strategists referred to the Federal Open Market Committee (FOMC) meeting on Feb. 1 to decide on interest rate hikes.
The rate hike is currently expected to be lower than any since early 2022, with sentiment favoring a 0.25% increase, according to CME Groups FedWatch Tool.Fed target rate probabilities chart. Source: CME Group
The lower the Fed Funds, the more liquidity there is in the system, Ram Ahluwalia, CEO of digital asset investment advisor Lumida Wealth Management, wrotelast week.
An accompanying chart showed what Ahluwalia suggested was a beneficial relationship between lower Fed funds rates and Bitcoin liquidity.
He continued by referencing an appearance on mainstream media by veteran economist Larry Summers on Jan. 13, in which the latter made positive noises about inflation abating.
Larry made a statement saying the Feds fight against inflation is much, much closer to being done. This is a positive surprise to risk assets and supports the Fed pivot camp, he argued. BTC benefits from QE Hypothesis: One of the big macro desks listened and went long bitcoin.Bitcoin vs. Fed funds rate chart. Source: Ram Ahluwalia/ TwitterGBTC winning streak continues
On the topic of institutional interest recovery, another chart retracing the entirety of its FTX losses is the largest Bitcoin institutional investment vehicle, the Grayscale Bitcoin Trust (GBTC).
Data from Coinglass shows that as of Jan. 13, the latest date for which data is available, GBTC shares traded at a discount to the net asset value of 36.26%.
This discount, formerly positive and known as the GBTC premium, has been ticking higher since the end of December 2022 and is now higher than at any point since the FTX meltdown.
Its largest-ever reading came just before that, when it hit 48.62%, with GBTC suffering as part of parent company Digital Currency Groups own FTX troubles.
That controversy continues to rage, often publicly, but GBTC is delivering its most encouraging results in months.
Behind the scenes, Grayscale continues to battle U.S. regulators over their refusal to allow it to convert GBTC to an exchange-traded fund (ETF) based on the Bitcoin spot price.
In an extensive Twitter update on Jan. 13, Craig Salm, Grayscales chief legal officer, referenced the firms commitment to win its case and bring the first spot Bitcoin ETF to the market in the U.S.
To reiterate, converting GBTC to a spot Bitcoin ETF is the best long-term way for it to track the value of its BTC, he summarized. Our case is moving forward swiftly, we have strong, common sense and compelling legal arguments and were optimistic that the Court should rule in our favor.GBTC premium vs. asset holdings vs. BTC/USD chart. Source: CoinglassDifficulty hits new all-time high
If Bitcoins price recovery were not enough to get bulls excited, its network fundamentals tell a similarly encouraging story.
Roughly in step with the weekly close, network mining difficulty increased by over 10%, marking its biggest uptick since October 2022.Bitcoin network fundamentals overview (screenshot). Source: BTC.com
The move has obvious implications for Bitcoin miners and suggests that the ecosystem already benefits from higher prices.
As Cointelegraph reported, miners had already been slowing the pace of their BTC reserve sales in recent weeks. At the same time, the difficulty increase reflects competition for block subsidies returning to the sector.
Over the past week, however, miner balances have decreased in response to Bitcoins rapid price rise. They stood at 1,823,097 BTC as of Jan. 16, data from on-chain analytics firm Glassnode shows, marking one-month lows.Bitcoin miner BTC balance chart. Source: Glassnode
Despite this, miner difficulty has now erased its FTX reactions and set a new all-time high in the process.
Bitcoin is in the process of retesting the estimated average cost of production price for Miners, Glassnode additionallynoted last week before most of the gains came.
It added that breaking above this level like offers much needed relief to miner incomes.
An accompanying chart showed its proprietary difficulty regression model, which it describes as an estimated all-in-sustaining cost of production for Bitcoin.Bitcoin difficulty regression model chart. Source: GlassnodeSentiment exits “fear” as whales buy big
It is no secret that the average Bitcoin hodler is experiencing some much-needed relief this month, but is it a case of unchecked euphoria?
Related:5 altcoins that could breakout if Bitcoin price stays bullish
According to the time-honored yardstick, the Crypto Fear & Greed Index, it could be too much, too soon regarding changes in the mood over Bitcoin price strength.
On Jan. 15, the Index hit its highest level since April2022.While not greedy yet, the move marks a significant change from just weeks prior.Crypto Fear & Greed Index (screenshot). Source: Alternative.me
The crypto market spent a large swathe of 2022 in its lowest extreme fear bracket.
Now, it is scoring above 50/100, dropping slightly into the new week to remain in neutral territory.
For research firm Santiment, which specializes in gauging the atmosphere around crypto markets, there is one overriding factor influencing Bitcoins newfound strength.
The answer, it wrote in a Twitter post at the weekend, lies firmly in whale activity.
Over the ten days to Jan. 15, big and small whales added to their positions, sparking a supply and demand chain reaction. In total, over that period, they purchased 209,700 BTC.
Santiment called the data a definitive explanation on why crypto prices have bounced.BTC accumulation annotated chart. Source: Santiment/ Twitter
The views, thoughts and opinions expressed here are the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph. #Bitcoin #Bitcoin Price #Markets #Stocks #Inflation Related News What is impermanent loss and how to avoid it? Can Canada stay a crypto mining hub after Manitobas moratorium? Why is the crypto market up today? BTC price 3-week highs greet US CPI 5 things to know in Bitcoin this week 5 cryptocurrencies that could benefit from a positive CPI report
