Bitcoin’s price correction in 2023 will see minimal institutional buying, casting doubt on whether BTC will surpass $25,000.
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The bullishness reflects the possibility of extending its issue price correction through March based on a mix of technical and macro indicators.
Bitcoin price is moving out of the descending channel range
First, bitcoin hitting $25,000 is likely to come from a breakout outside of its prevailing descending channel range.
Notably, the price of BTC moved out of this range late last week, despite an increase in its trading volume. The rise in cryptocurrency moves also pushed the price above its resistance confluence, including the $20,000 psychological price range and its 20-week exponential moving average (20-week EMA; Greenwave) near $19,500, as shown below
BTC/USD 1 Week Candlestick Chart (Coinbase). Source: TradingView.com
Breaking the three levels of resistance in strong volume reveals traders’ persistence on extended price increases. Should this happen, Bitcoin’s next bounce target would appear at its 200-week EMA (yellow wave) at around $25,000 — 20% above current price levels.
Dollar creates a “death cross”.
Bitcoin’s bullish technical outlook is seen against the backdrop of a relatively weak U.S. dollar, which is down on expectations that the Federal Reserve will hold off on raising interest rates as a result of lower inflation
The two assets have mostly moved opposite each other since March 2020. As of January 16, Bitcoin and the U.S. , according to TradingView.
BTC/USD and DXY correlation coefficients. Source: TradingView
The traditional technical setup sees further losses for the dollar ahead.
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Called a “death cross,” this setup appears when the asset’s 50-period moving average crosses below its 200-period moving average. For the dollar, Death Cross is showing its weak momentum, meaning its short-term trends are underperforming in the long-term direction.
DXY Daily Price Chart. Source: TradingView
The independent market analyst said of the Crypto Aid dollar, “Further declines are expected in the medium to long term.
“The risk in assets in that respect should bounce higher. Or better said: I expect BTC to break its slow cycle, as DXY has a huge run finito.”
There is no long-term bitcoin price increase
Bitcoin is still 30% above $20,000 in 2023, but data in the series shows that the buying trend lacks support from institutional investors.
Related: Bitcoin surges 300% in the year before the last half happens — is 2023 different?
For example, according to CryptoQuant’s Fund Holdings Index, the total amount of bitcoin held by holdings of digital assets such as trusts, exchange-traded funds and other funds has been decreasing during the currency’s appreciation in recent months
Bitcoin Fund Holdings. Source: CryptoQuant
Moreover, according to a comparison between CryptoQuant’s token transfer and fund flow ratio metrics, no unusual transactions occurred on-chain but on crypto exchanges
BTC/USD versus token transfer (orange) and fund flow ratio (blue). Source: CryptoQuant
The token transfer metric shows the number of coins transferred in a specific timeframe, while the fund flow ratio represents the ratio of exchange-related coin transfers to overall coin transfers network-wide
Market analyst Mac_D noted that institutional investors generally want to buy quietly through OTC trading at low levels.
“These trades were only actively traded on the exchanges and there were no unusual trades on the chain. […] Current institutional investors have been quiet and just watched. OTC trading will intensify when they expect a full uptrend change.”
This article does not contain investment advice or recommendations. Every investment and business move carries risk, and readers should do their research as they decide.
