With the Bitcoin price steamrolling above the all-important $20,000 level, analysts are speculating on where the BTC price could be headed.
It reached its yearly high of $21,095 on Jan. 13. Where will it go next?
After a strong rally across the crypto market following a perceived positive report from the Consumer Price Index (CPI), Bitcoin is currently trying to accelerate at a bullish pace.
Bitcoin’s recent rally has produced an increase in volume levels and an increase in social engagement to see if the price is in a breakout of fakeout mode.
Is the Bitcoin bear market over?
Although the market is still technically in a bear market compared to last week, investor sentiment is improving. Investor sentiment about the market hit a monthly high, according to the Fear-Grid Index, a crypto-specific metric that measures sentiment using five weighted sources
Bitcoin Fear and Greed Index. source options.m
The Bitcoin price is now above the psychologically important $21,000 level and many analysts and traders are releasing their views on where the BTC price could go next.
Let us explore some of these approaches.
The scale of bitcoin trading is a concern
Bitcoin prices have yet to recover from pre-FTX levels but topped $21,095 on January 13 for the first time since November 8, 2022. Despite the strength of the recent rally, some analysts believe that BTC needs to stay above $21,000 which is the current bullish trend sustained before gaining support.
According to Glasnode analysis:
“A new bullish trend that began on January 1 took Bitcoin to the $18.6 – $18.9k level, although a crossover at $19k is needed to claim a new trading channel around $19-$21k. Expect resistance around these levels as Bitcoin faces a mid-term downtrend. If price fails to break above the trend line, we expect it to trace towards the $16,000-$17,000 region.”
BTC price against volume. Source: Glassnode
The lack of trading volume of approximately $18,000 reflects the weakness of current Chain-Centred Exchange (CEX) activity. The largest volume and overall activity seems to be around the $16,000 level, indicating that there is a solid bottom above the current price range. In low volume around levels above $21,000, Bitcoin’s rally could be limited to $21,095.
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Is this just a bear market meeting?
Bitcoin still faces headwinds in a tightening macroeconomy including massive exchange layoffs, twin-generation legal issues and the possible establishment of a crypto-focused subcommittee in the US House
In addition, Bitcoin’s Relative Strength Index (RSI) suggests that BTC is currently overbought. According to RSI’s analysis, the more correct the price, the faster a downward trend can form.
Bitcoin RSI. Source: TradingView
Macro markets are also at key resistance levels. The United States Dollar Index (DXY) has found major support which means that if the index recovers, a sell-off in risky assets such as bitcoin could begin. Bitcoin remains correlated with equities and the SPX mini futures index is also showing signs of a pullback.
TraderSZ explains below:
As suggested by TraderSZ, it may be difficult for BTC to reach higher levels as bitcoin investors take profits.
Historical analysis shows a new bitcoin floor
Bitcoin is currently below its 200-week moving average and according to independent market analyst Rect Capital, historical data suggests the price of bitcoin may have already reached its macro bottom. Historically, the “Death Cross” level has shown a floor of $23,500.
Traders and technical analysts are not known for accurately predicting how long a bull or bear market could last, but independent market analyst Hornheirs cited historical data from 2015 in pushing Bitcoin to new all-time highs He estimated how long it would take
The 2015 to 2017 bull market lasted 1064 days, which corresponds to the 2018 to 2021 bull market lasting the same amount of time. If traders matched the current market in the upcoming bear market from 2017 to 2018 to 2021, it would take 1,001 days until Bitcoin reached a new all-time high
Despite the current situation and the strength of the current price breakdown, Bitcoin has proven many technical analysts wrong in the past. Risk-averse traders might consider keeping an eye on increased trading volume at higher prices as an indicator of whether bitcoin has finally returned to a bull market.