Bitcoin (BTC) Starts the First Week of 2023 in an Uninspiring Placeas volatility stays away, along with traders.
After not moving during the Christmas and New Year holidays, BTC price action remains locked in a tight range.
After having sealed annual losses of almost 65% in 2022, Bitcoin has arguably experienced a classic bear market year, but few are actively predicting a recovery at the moment..
The situation is complex for the average hodlerwhich is watching for macro triggers courtesy of the US Federal Reserve and the impact of economic policy on dollar strength.
Before Wall Street returns on January 3, Cointelegraph takes a look at the factors at play when it comes to BTC price performance in the coming week and beyond..
Bitcoin Traders Fear New Lows Amid Flat Price
Bitcoin traders may be craving volatility, but so far, BTC price action has remained clearly comatose.as data from Cointelegraph Markets Pro and TradingView show.
it seems that nothingNot even low-volume holiday trading, quarterly and yearly candle closeouts, not even macro data printouts before then, can change the status quo.
As Cointelegraph reported, bitcoin’s volatility even managed to hit new all-time lows in the run-up to the end of the year, according to the bitcoin historical volatility (BVOL) index..
Looking ahead, traders are conservative about what lies ahead for the BTC/USD pairsince the signs of a fundamental change continue to be totally absent in the behavior of the market.
“It takes a little pump at resistance to get everyone bullish again. This same bull trap has been going on for all of 2022, yet people don’t learn,” plot Il Capo of Crypto on the day:
“It is very likely that it will reach USD 12,000.”
His comments came alongside a modest move higher for bitcoin, which broke above $16,700 for the first time in several days..
The popular trader and analyst Pentoshi echoed her words, pointing out likewise $12,000 as a key support zone for bitcoin to revisit in terms of volume on longer time frames.
Your Analyst Fellow Toni Ghinea, meanwhile, returned to bet for a minimum between USD 11,000 and 14,000 for the BTC/USD pair.
“I expect all these levels to be reached in 2-3 months,” the comment confirmed on Twitter on January 1..
Michael Burry warns that inflation will return
With another week to go until the print of the US Consumer Price Index (CPI) for December arrives, the early days of January are relatively quiet when it comes to BTC price macro catalysts.
However, that does not mean that there is nothing to pay attention to, since Purchasing Managers’ Index (PMI) and Nonfarm Payrolls data expected next week.
The short- and medium-term trend continues to be one of lower inflation, according to the CME Group’s FedWatch toolwhich in turn leaves risky assets room for maneuver.
The Federal Reserve has not yet given signs that it is going to turn its interest rate hikesdespite the fact that the rate of these increases has already begun to decline. As soon as those signals occur, risk sentiment should strengthen markedly..
The Federal Reserve will publish the minutes of its Federal Open Market Committee (FOMC) meeting on January 4in which it will offer clear guidelines on the policy to follow.
However, For “Big Short” investor Michael Burry, even that more forgiving scenario is not the end of the inflation story..
“Inflation has peaked. But it is not the last peak of this cycle,” warned in a tweet on January 2:
“We are likely to see a lower, possibly negative CPI in the second half of 2023, and the US in recession by any definition. The Fed will cut and the government will stimulate. And we will have another spike in inflation. Is not difficult.”
The results of the Fed’s policy have been clearly seen in the behavior of the stock markets in 2022; the S&P 500, for example, ended the year 1,000 points below many popular estimates.
As markets wait for the first Wall Street trading day of 2023, The US Dollar Index is already struggling in what could be the first silver lining of the year for crypto assets..
The US Dollar Index (DXY) is currently threatening to fall through support that has not been challenged for over six months, after which the 100-point level re-enters..
“Markets: DXY on the verge of breaking out again, 10-year yields are reaching resistance, WTI Crude bounced off resistance, gold stopped at resistance, stocks are treading water,” summarized callum thomasfounder and head of research at macro research house Top Down Charts, in part his Twitter comments of the day.
Ditch Difficulty Amid Gloomy Hash Rate Data
In the world of bitcoin fundamentals, the year begins as usual.
Bitcoin’s next difficulty adjustment, scheduled for January 3, will wipe out gains made two weeks earlier, in a sign that miners remain under pressure over BTC price performance..
After rising 3.27% on December 19, difficulty will drop 3.5% this weekaccording to data from BTC.com, which will not reach new all-time highs.
The difficulty data itself provides an interesting insight into the health of bitcoin “under the hood”; Despite concerns about miners’ financial stability, competition for block grants remains strikingly high.
Having said that, data from late December paints a bleak picture for the average network participant; hash rate -an estimate of the aggregate processing power dedicated to mining- reached its lowest levels of the year.
“This is by far the most brutal bitcoin miner capitulation since 2016 and possibly ever,” commented at the time Charles Edwards, founder of Capriole Investments:
“Hash Ribbons capitulation has captured the lowest bitcoin hash rate reading of 2022 as miners go bankrupt and default under the great pressure of squeezed margins globally.”
An accompanying chart showed the Bitcoin Hash Ribbons indicator entering another “capitulation” zone, in which miners lock down the hash rate en masse.. A similar event occurred in July 2022 and another a year earlier.
As Cointelegraph reported, public bitcoin mining companies also continue to feel the strain; Core Scientific obtained a provisional bankruptcy loan of nearly $40 million from creditors, including BlackRock.
BTC offer falls asleep
Since volatility has been absent from the bitcoin price for weeks, it is understandably there is little impetus to sell among hodlers.
The latest on-chain data supports this theory, since BTC supply is more and more inactive because speculators stay away.
According to on-chain analytics firm Glassnode, the amount of stationary supply in your wallet over the last five to seven years has reached its highest point since January 2018.
That trend continued for much of last year.as those who bought BTC in the last halving cycle see their purchase prices return.
As supply ages, the volume of currencies moving in the short term also decreases, indicating an absence of impulsive speculative trading..
The amount of the BTC supply last active between three and six months ago is now at a five-year low, confirm glassnode. The active offer between three and five years ago is now at a one-year low.
“Supply is getting weird again”, answered the Stockmoney Lizards analysis resource to similar latency data at the end of last month.
An accompanying chart showed the relationship between the idle supply and the macro highs and lows for BTC price action..
The feeling is neither here nor there
In a similar sign that many market participants simply don’t know how to feel about the future of cryptocurrencythe feeling is neither here nor there.
That’s a reading from the popular sentiment meter, the Cryptocurrency Fear and Greed Index, which continues to sail into territory just above “extreme fear”.
A story that already characterized much of the period after the collapse of FTX, sentiment seems to be confused about how bad the state of cryptocurrency really is.
Of the five sentiment categories in the Index, only “fear” has endured in recent weeks, with the latest trip into “extreme fear” coming in late November..
As Cointelegraph has explained in a dedicated guide, the Fear and Greed Index can provide key insights into market activity based on investor behavior. In 2022, it reached lows of 6/100, a score rarely seen in the life of bitcoin.
“Although 2022 was brutal for the crypto space in terms of sentiment, I have never been more excited about the industry long-term from a fundamentals perspective,” concluded daniel cheungco-founder of investment firm Syncacy Capital, in a Twitter thread on January 1.
The views, thoughts and opinions expressed herein are solely those of the authors and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Clarification: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information presented here should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
Keep reading: