After a lacklustre end-of-year close from the price of Bitcoin, the second week of January 2023 brought the cryptocurrency to its highest point in months, despite the yearly low of $15,500 after the FTX collapse.
So far, Bitcoin has risen clearly above the $18,000 and $20,000 zone and has even managed to rise above the $21,000 resistance.
According to data from CoinMarketCap and TradingView, Bitcoin is currently changing hands around $21,200 and appears to be in consolidation.
This, of course, is a good thing.
After several months of endless bearishness, the flagship cryptocurrency is now showing signs of bullish strength and has renewed faith in cryptocurrencies in general.
However, looking at the recent price action of Bitcoin from another perspective, it is easy to wonder whether Bitcoin's latest bullishness is indeed a sign of a recovery, or whether the flagship cryptocurrency is currently in one of the largest bull traps of all time.
So far, analysts and traders alike have started to show signs of panic as to where Bitcoin might be headed next. Has Bitcoin in fact hit the bottom and can only go up from here, or is this only the start of a devastating price dip to $12,000?
There have been a few bearish scares as to Bitcoin's price direction over the last few days.
According to a tweet from the trader and analyst Ali on Twitter, most of the traders on Binance appear to be leaning towards bearishness. Ali goes ahead to say that at the beginning of the year on 16 January, 51% of all the accounts with open Bitcoin positions were opening shorts. Ali also notes that that number is beginning to grow, and is now at 57%.
In another tweet, Ali also mentioned that miners bought roughly 3,600 Bitcoin when it traded at $16,700 on Jan 1. however, between Jan 5 and Jan 11, they accumulated another 1000 BTC as the cryptocurrency's price rose.
Ali also noted that when Bitcoin surpassed $20,000, the miners decided to book profits and have sold about 4000 BTC so far since 12 January.
All of these bearish signs, compared with the fear, uncertainty and doubt as the flagship cryptocurrency retests the $21,000 zone has served as fuel for speculations that "maybe" another final decline to $12,000 may not be impossible after all.
Bitcoin's rise above $21,000 is a breath of fresh air, compared to the price action of the cryptocurrency over the last few quarters. However, its current standing is a far cry from the $69,000 all-time high it hit in November 2021.
The current rally on the cryptocurrency comes after a bleak 2022 marked by significant scandals and insolvencies in the cryptocurrency sector, notably the Terra ecosystem crash, the collapse of FTX/Alameda, and a dramatic decline in the overall market attributed to the US Federal Reserve.
According to analysts, several variables are responsible for Bitcoin's rally, with some of the most prominent reasons being whale activity.
The latest data from the latest U.S. inflation statistics indicated a moderate decline, with the consumer price index (CPI) falling by 0.1% on a monthly basis in December, in accordance with Dow Jones forecasts.
All of these have been some of the factors contributing to the bearish scares on cryptocurrency. However, keeping the upcoming 2024 bitcoin halving in mind, it is easy to become confused as to what the cryptocurrency may do this year.
According to the charts, Bitcoin has gained significant momentum after the FTX $15,500 low. However, it is now at a significant resistance zone, and the bulls may have a hard time crossing this bridge.
After passing the 50-day and 100-day moving averages on 12 January, the price of bitcoin continued to rise. The cryptocurrency's price action over the last few weeks formed a descending channel and broke through to the upside in an impulse move that took it towards $21,000.
The bulls will likely be encouraged to push against the bears if Bitcoin successfully reaches the $21,500 zone and breaks through to the upside.
However, a price reversal and retest of the breakout point around $18,000 seems very likely at this point
At the same time, if such a breakout from $21,500 occurs, the next fairly strong target would be the $25,000 zone and Bitcoin may surge towards it.
Although the 200-day moving average still appears to be ascending while the 50-day moving average is currently flat, the long-term trend still seems considerably bullish. The daily RSI is now over 50, meaning that the bulls are in control and that the market has some room to rise before it crosses the overbought zone.
Overall, only time will tell where Bitcoin (and ultimately the rest of the market) is headed in the long term.
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