Bitcoin (BTC) is facing a “bottoming candle” in 2023, but BTC price action is still more than capable of surprising the market.
In a January 11 tweet, popular trader and analyst Rekt Capital predicted that the BTC/USD pair could see a “decent edge” this year.
The chart shows the upside potential of Bitcoin
Analyzing Bitcoin’s four-year market cycles around halving events, Rekt Capital drew attention to 2023 as the deadline for its next “bottoming candle.”
With the next halving in 2024, the next 12 months should see a price bottom, followed by a rally as the event approaches.
2024 forms the fourth candle in the current Bitcoin cycle, and 2023 the third.
“Candle 3 is a bottoming candle on BTC’s four-year cycle. But it can still generate a decent upside,” Rekt Capital commented.
The possibility of Bitcoin taking traders by surprise is clearly visible on the four-year cycle chart.
“3 candle in 2015 saw a +234% move. 3 candle in 2019 saw a +316% rally,” he continued.
“The 3 candle in 2023 may see a stronger upside than most think.”
Some other on-chain observations have led market participants to similarly optimistic conclusions.
Among them, the proportion of unrealized losses held by BTC hodlers remains in a “capitulation” phase, according to an indicator dedicated to monitoring the status quo.
“These have been the most profitable times to accumulate Bitcoin. Net unrealized profit/loss is still in deep capitulation terror,” wrote the Game of Trades trading and analysis account on Twitter on January 11.
The macroeconomic climate of 2023 is reminiscent of the CFG, warns an analyst
However, given the current macroeconomic environment, rising from the ashes may require quite a bit of luck when it comes to repressed crypto asset prices.
With the US Federal Reserve continuing to raise interest rates as inflation eases, concerns now turn to the longer-term policy implications.
According to analysts, including Reventure Consulting founder and CEO Nick Gerli, the next thing that could affect sentiment is not inflation, but deflation.
Commenting on a graph on savings trends in the US, Gerli warned on January 10 that the conditions were ripe for a repeat of the 2008 Global Financial Crisis (GFC) in terms of recession.
“The savings rate has just plummeted to 2.2%, the lowest level in history,” he revealed.
“It means Americans are running out of money. Last time it was this low was 2006-07. Just before CFG. Major recession alert. Big decline in consumer spending expected in 2023.”
The first US Consumer Price Index of 2023 will be released on January 12, and there are already bets on how Bitcoin will react.
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