Bitcoin (BTC) staged a brief but promising return to $17,500 overnight on Jan. 11 as the new strength held.
Bitcoin fails to convince skeptical traders
Data from Cointelegraph Markets Pro and TradingView showed that the BTC/USD pair reached fresh local highs of $17,504 on Bitstamp.
Nearly tied with the December 16 high, the pair showed unusual bullish momentum amid some of the lowest volatility ever seen during the holiday season.
Traders and analysts expect an erratic reaction to upcoming US macroeconomic data. The Consumer Price Index (CPI), due to be released on January 12, is expected to reinforce the idea that inflation is declining, which could offer an opportunity to risky assets.
However, many voices urged caution, given the lack of any signs of fundamental price support.
The comments by Jerome Powell, the chairman of the Federal Reserve, had disappointed markets the previous day, avoiding mentioning future politics or the state of the economy itself.
“The real break or fall will come on Thursday when the CPI data is released,” summarized on Twitter the popular trader; Johnny.
A later post warned on “bullish tweets as BTC settles under longer time frame resistance at $17,600”, with Johnny urging previously told followers not to “feel the FOMO urge especially this week.”
“This week’s CPI could put prices back to where they were last week,” he argued.
The conservative approach seemed symptomatic of the general feeling of apathy among market participants on the day, with little belief that BTC could begin a sustained rally.
The past few weeks have seen continued low price predictions, with some of the best-known traders focusing on $12,000, $10,000 or even less.
“Are we entering ‘disbelief’?” Question Philip Swift, co-founder of the Decentrader trading platform.
The bearish stance held firm when it came to Il Capo of Crypto, who ignored the recent rally across the crypto space to insist that there was “not a single bullish confirmation yet.”
“Just look. It’s there before your eyes. The downtrend is intact,” he commented next to the BTC/USD three-day chart.
“Bitcoin and most of the market are touching broken support as well as resistance. We’ve seen it time and time again.”
Altcoin volume is “very worrying”
Equally dubious was the forecast for altcoins, with Ether (ETH) outperforming BTC as the rally set in.
The ETH/USD pair is up nearly 17% off the mid-December lows of $1,150 on Jan. 10.
Looking at the dominance of trade volume, Maartunn, a contributor to on-chain analytics platform CryptoQuant, feared the worst.
“In my 6 years of experience with cryptocurrencies, I have realized something important. Healthy and sustainable price movements start with the rise of Bitcoin, which is followed by Ethereum/altcoins,” he wrote in a blog post.
“Usually when traders get bored with BTC, they start speculating on altcoins which are generally further down the risk curve. This makes them very fragile and easy to squeeze.”
An accompanying chart showed altcoin volume dominance above 50% of the total, which could be a clear sign for bulls.
“Today, altcoin dominance is again above 50%. Obviously, this doesn’t have to be as big as this example. But to keep in mind: when altcoins continue to dominate, there is the potential for increased risks to the down,” he added.
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