Disclaimer: This article aims to convey more market information and does not constitute any investment advice. The article only represents the author's viewpoint and does not represent the official stance of MarsBit
Disclaimer: This article aims to convey more market information and does not constitute any investment advice. The article only represents the author's viewpoint and does not represent the official stance of MarsBit.
Editor: Remember to follow me
Source: Cointelgraph Chinese
Bitcoin has started a new week, reaching a new high in 2023, but after a significant increase in prices, people's views on Bitcoin still differ.
In the process of forming an eliminator against last year's slow decline, January provided the volatility that Bitcoin bulls hoped for - but can this volatility be sustained?
For market participants entering the third week of this month, this is a key issue.
People still have different opinions on the fundamental strength of the special currency; Some people fully believe that rising to a two month high is a 'fool like rebound', while others hope that the good days will continue - at least for now.
In addition to market dynamics, there are also potential catalysts waiting to have an impact on market sentiment.
US economic data will be released one after another, and corporate financial reports may bring some new fluctuations to the stock market this week.
With everyone's attention focused on new support and the fate of the Bitcoin bear market, Cointelgraph analyzed five potential Bitcoin price drivers.
Analysts believe that Bitcoin prices will experience consolidation
After breaking through some key resistance levels in the past week, Bitcoin is facing increasing questioning.
As reported by Cointelgraph, in the long run, people still tend to be generally bearish, and almost no one believes that the current momentum will eventually surpass the bear market rebound.
Due to the ongoing warning of a new macroeconomic low of $12000, Bitcoin is being closely monitored for signs of a decline. However, so far, this has not occurred.
According to data from Coingraph MarketsPro and TradeView, this week's closing price remains unchanged from the closing price before the demise of FTX. At the time of writing, BTC/USD is still above $20000, hitting a new local high of $21411 overnight.
Volatility still exists, with fluctuations of hundreds of dollars per hour being common. At the time of writing this article, Bitcoin prices fell below the $21000 mark, described by commentator Tedtalksmacro as a "liquidity hunt".
The on chain analysis resource MaterialIndicators analyzed the level of maintenance in a broader callback scenario and determined a 21 week moving average (MA) of $18600.
Another $11 million bidding wall is used to defend the top of Bitcoin in 2017, "it points out next to another chart in the Coin Security order book.
"It is symbolic to stay above this level, which increases the possibility of the rebound extension. But in my opinion, holding the 21 week moving average is crucial to the continuous rebound. TradFi was closed on Monday for Martin Luther King. The volatility continues."
BTC/USD1 Daily Candle Chart (Bitstamp) 21 Week Moving Average Source: TradeView
A previous article added that whale activity has indeed helped boost the exchange market.
At the same time, trading account StockmoneyLizards has focused on the reversal of FTX losses, stating that there will be a "slight (horizontal) consolidation" at current levels.
On the same day, the US dollar index (DXY) remained close to its lowest level since early June 2022, reaching 107.77.
Dollar Index (DXY) 1-Day Candle Chart Source: TradeView
The focus shifts towards using financial reports as a catalyst for the stock market
From the macro data perspective, this week will usher in a good start, with the release of the Producer Price Index (PPI) on January 18th.
Federal Reserve officials will make various speeches, and the stock market may be affected by another phenomenon in the form of corporate financial reports this week.
As Bank of America strategists pointed out in a report last week, the S&P 500 index has become particularly sensitive to financial reports. In terms of influence, these data even exceed classic data such as the consumer price index (CPI).
They wrote, "We believe this is a narrative shift in the market from the Federal Reserve and inflation to financial reports: the response to financial reports has been increasing, while the response to inflation data and FOMC meetings has been decreasing." CNBC and other media quoted them as reporting.
Strategists mentioned the upcoming Federal Open Market Committee (FOMC) meeting of the Federal Reserve, which will decide to raise interest rates on February 1st.
According to the FedWatchTool of CMEGroup, the interest rate is currently expected to be lower than any level since the beginning of 2022, and market sentiment is inclined to increase the interest rate by 0.25%.
Federal Reserve Target Interest Rate Probability Chart Source: CMEGroup
Ram Ahluwalia, CEO of Digital Asset Investment Advisor Lumida Wealth Management, wrote in a study last week: "The lower the federal funds rate, the more liquidity there is in the system
The accompanying chart shows the beneficial relationship between Ahluwalia's proposed lower federal funds rate and Bitcoin liquidity.
He then mentioned a appearance of senior economist Larry Summers in mainstream media on January 13th, where Larry Summers expressed a positive view on easing inflation.
He said, "Larry issued a statement stating that the Fed's task of fighting inflation is' very, very close to completion. 'This is a' positive surprise 'for risky assets and supports the Fed's shift towards the camp," he said.
Bitcoin vs. Federal Funds Rate Chart Source: RamAhluwalia/Twitter
GBTC's winning streak continues
On the topic of institutional interest recovery, another chart to recover all FTX losses is the largest Bitcoin institutional investment vehicle, the Gray Bitcoin Trust (GBTC).
According to Coinglas' data, as of January 13th (the latest available date), the trading price of GBTC shares is 36.26% lower than the net asset value (NAV).
This discount, previously positive and known as the "GBTC premium," has been rising since the end of December and is now higher than at any time since the FTX crash.
Its largest reading in history was before that, when it reached 48.62% due to the grayscale being affected by the parent company Digital Currency Group (DCG)'s own FTX troubles.
This controversy continues, usually openly, but GBTC has achieved its most encouraging results in months.
At the same time, behind the scenes, grayscale continues to struggle with US regulatory agencies as they refuse to allow it to convert GBTC into exchange traded funds (ETFs) based on Bitcoin spot prices.
In a Twitter update on January 13th, Grayscale Chief Legal Officer Craig Salm repeatedly mentioned the company's "commitment" to win its case and bring its first spot Bitcoin ETF to the US market.
He concluded, "To reiterate, converting GBTC into Bitcoin spot ETFs is the best long-term way to track the value of Bitcoin
Our case is advancing rapidly, and we have strong, common sense, and convincing legal arguments. We are optimistic that the court should make a ruling in our favor
GBTC Premium vs. Asset Holdings vs. BTC/USD Chart Source: Coinglas
Mining difficulty reaches a new historical high
If the price rebound of Bitcoin is not enough to excite bulls, then the network fundamentals of Bitcoin are equally encouraging.
In line with the weekly closing price, the difficulty of Bitcoin network mining has increased by more than 10%, which is the largest increase since October last year.
Overview of the Basic Principles of Bitcoin Network (screenshot) Source: BTC.com
This has a significant impact on the Bitcoin miners and indicates that the Bitcoin ecosystem has benefited from price increases.
According to Cointelgraph, in recent weeks, miners have slowed down the pace of selling BTC reserves, and the increase in difficulty reflects the competition for block subsidies returning to this field.
However, in the past week, due to the rapid rise in Bitcoin prices, the balance of miners has decreased. According to data from Glassnode, an on chain analysis company, as of January 16th, their BTC balance was 1823097, setting a new low in a month.
Bitcoin Miner BTC Balance Chart Source: Glassnode
Nevertheless, the difficulty has now erased its FTX reaction and reached a historic high in the process.
Before most of the revenue arrived, Glassnode also pointed out last week that "Bitcoin is retesting the estimated average production price cost of miners
It added, "Breaking through this level is like providing much-needed relief for miners' income
The accompanying chart shows its proprietary 'difficulty regression model', which is described as' the estimated total ongoing production cost of Bitcoin '.
Bitcoin Difficulty Regression Model Figure Source: Glassnode
Market sentiment retreated from "fear" as whale investors bought heavily
Undoubtedly, ordinary Bitcoin holders are experiencing some urgently needed relief this month, but is this an unrestrained excitement?
According to the long-standing measurement standard 'Cryptocurrency Fear and Greed Index', when it comes to emotional changes in the strength of Bitcoin prices, it is likely to be 'too much, too fast'.
On January 15th, the index hit its highest level since April last year, although it has not yet reached "greed", this move marks a significant change compared to the previous few weeks.
Cryptographic Fear and Greed Index (screenshot) Source: Alternative.me
According to Cointelgraph, for most of 2022, the encryption market was in a state of 'extreme fear', which was not influenced by FTX.
Now, the index is above 50/100 and has slightly decreased in the new week, remaining in the "neutral" region.
Santiment, a research firm specializing in evaluating the cryptocurrency market atmosphere, believes that despite this, there is one of the most important factors affecting the new power of Bitcoin.
Over the weekend, the company tweeted that the answer lies in whale activities.
In the 10 days ending January 15th, whales of all sizes increased their positions, triggering a chain reaction of supply and demand in the process. During this period, they purchased a total of 209700 Bitcoins.
Santiment called these data "a clear explanation for the rebound in cryptocurrency prices".
BTC Accumulation Annotation Chart Source: Santiment/Twitter
Disclaimer: The content of this article is sourced from the internet. The copyright of the text, images, and other materials belongs to the original author. The platform reprints the materials for the purpose of conveying more information. The content of the article is for reference and learning only, and should not be used for commercial purposes. If it infringes on your legitimate rights and interests, please contact us promptly and we will handle it as soon as possible! We respect copyright and are committed to protecting it. Thank you for sharing.(Email:[email protected])
