With a gain of almost 25% over the previous two weeks of 2023, Bitcoin began the New Year on a positive note and was trading above $21,000, trading higher than MasterCard and Meta in value.
Additionally, Bitcoin is now more valuable than brands like MasterCard and Meta, with a market worth of over $400 billion.
By market capitalization, the biggest cryptocurrency has maintained a price above $21,000, which is a level it has not traded since November 2022.
Prior to a flurry of encouraging economic news, notably a drop in the U.S. Consumer Price Index (CPI), which finally sent cryptocurrency and stock prices northward, Bitcoin was trading below $17,000.
A psychological price ceiling of $20,000 and BTC’s 20-week exponential moving average (20-week EMA; the green wave) at $19,500 formed a resistance confluence that was broken by the price increase.
Strong volume breaking three resistance levels demonstrates traders’ confidence in a prolonged market advance. Should it occur, Bitcoin’s next upward objective is at its 200-week EMA (the yellow wave), which is roughly $25,000. This represents a 20% increase over the current price.
Dollar cross of doom The U.S. dollar is down due to anticipation that the Federal Reserve would cease rising interest rates as a result of decreased inflation, which contrasts with Bitcoin’s bullish technical outlook.
Since March 2020, the two assets have usually moved in opposition to one another. According to TradingView, as of January 16, there was a -0.83 daily correlation coefficient between Bitcoin and the U.S. Dollar Index (DXY), a measure of how strong the dollar is relative to its main rivals.
In an email, Bradley Duke, co-CEO of cryptocurrency ETP provider ETC Group, claimed that positive economic data in the US, including lower inflation statistics and strong job growth numbers, as well as positive economic data in Europe in which the EU released unemployment stats that were the lowest in 23 years.
The BTC future market echoed this shift in mood, with traders placing long bets four days in a row based on the Long-Short ratio.
Head of research at the Canadian digital asset management 3iQ, Mark Connors, explained:
“Looming large in our three-part thesis on digital asset adoption is the juxtaposition of a growing U.S. debt load set against a declining workforce that is ‘ageing out. If we don’t let inflation cut our debt in real terms and we cannot grow out of it, expect more of it.” He further added, “BTC is more correlated to debasement than inflation, so not surprised to see BTC lift with the prospects of more debt.”
Despite Bitcoin’s 30% increase above $20,000 so far in 2023, on-chain data reveals that institutional investors are not supporting the purchasing trend.
For instance, according to CryptoQuant’s Fund Holdings index, the total quantity of Bitcoin owned by holdings of digital assets such trusts, exchange-traded funds, and other funds has been decreasing amid the coin’s price surge in recent months.
According to comparisons between CryptoQuant’s Token Transferred and Fund Flow Ratio measures, no noteworthy transactions happened on-chain but rather on cryptocurrency exchanges, suggesting that this is solely a retail rally.
Other significant cryptocurrencies were up earlier this week, with CRO, the token of exchange Crypto.com, gaining by more than 7%. SOL, the Solana blockchain’s native coin, increased by more than 1.4% to maintain its recent upward trend. In addition to its recent improbable gains, FTT, the token of troubled cryptocurrency exchange FTX, increased by more than 24% at one time.
Over the weekend, the total value of the cryptocurrency market reached $1 trillion, and since Friday, there have been more than $500 million in short liquidations—bets against rising prices—making this the largest amount since November 2022.
The Crypto Fear & Greed Index has reached 45, remaining in the fear zone. But compared to June, this is perhaps six times more.