After Bitcoin (BTC) hit a yearly high of $19,501 on Jan. 13, the big question is: where is it headed now?
Bitcoin is currently experiencing a bullish rally after the positive Consumer Price Index (CPI) report was followed by a strong upward move across the entire cryptocurrency market.
Bitcoin’s recent rally is creating increased volume levels and increased social engagement on whether the price is in a breakout or false breakout mode.
Is the Bitcoin bear market over?
Although the market is still technically bearish compared to last week, investor sentiment is improving. According to the Fear and Greed Index (a cryptocurrency-specific metric that measures investor stance using five weighted sources) sentiment towards the market hit a monthly high.
The Bitcoin price is approaching the psychologically important $20,000 level and many analysts and traders are casting their opinions on where the BTC price could go next.
Let’s look at some of these perspectives.
Bitcoin trade volume remains worrisome
The Bitcoin price has yet to recover from its pre-FTX crash levels, but it did break above $19,501 on Jan. 13 for the first time since Nov. 8, 2022. Despite the strength of the recent rally, some Analysts believe that the BTC price needs to reach $21,000 before the current uptrend can be sustained.
According to Glassnode’s analysis:
“A renewed uptrend that started on January 1 brought Bitcoin to the $18,600-$18,900 level, however, it is necessary to cross $19,000 to establish a new trading channel around $19,000-21,000. Resistance is expected around these levels as Bitcoin faces a downtrend in the medium term. If the price fails to break above the trend line, we expect a pullback towards the $16,000-$17,000 zone.”
The lack of trade volume around $18,000 shows the weakness of current activity on-chain and on centralized exchanges (CEXs). The higher volumes and general activity seems to be around the $16,000 level, which suggests that it is a more solid bottom than the current price range. With less volume around the above $20,000 levels, Bitcoin’s rally could be capped at $20,000.
Is it just another bear market rally?
Bitcoin continues to face headwinds, including mass layoffs in an increasingly difficult macroeconomic environment, legal troubles at Gemini and Genesis, and the possible creation of a cryptocurrency-focused subcommittee by the US House of Representatives.
Additionally, Bitcoin’s RSI is currently showing the cryptocurrency as overbought. Based on RSI analysis, a strong downtrend could form as the price corrects.
Macroeconomic markets are also at important resistance levels. The US Dollar Index (DXY) is at key support, meaning risk assets like Bitcoin could start to see steep selling if the index recovers. Bitcoin continues to be correlated to the stock market and the mini SPX index futures is also showing signs of reversal.
As TraderSZ explained:
$BTC – huge resistance here…dxy at key support…ES looking like it could pullback abit, eth at macro mid range…been up only all week so could get some profit taking/pullback….arrow would be my trigger IF it follows plan pic.twitter.com/6JziAmBywH
—TraderSZ (@trader1sz) January 12, 2023
With Bitcoin investors taking profit as TraderSZ suggests, it may be difficult for BTC to reach higher levels.
Historical Analysis Points to a New Bitcoin Low
Bitcoin is currently below its 200-week moving average and according to independent market analyst Rekt Capital, the price of Bitcoin may have already hit its macro bottom based on historical data. Historically, the “cross of death” level shows a low of $23,500.
Several months later and #BTC has dropped into the Macro Bottoming Area as dictated by historical $BTC Death Cross price trends
According to these principles, the general Bottoming Out area begins from $23500 (green)#Crypto #Bitcoin https://t.co/85DjLHoZnD pic.twitter.com/iTbCV1CxG3
— Rekt Capital (@rektcapital) January 13, 2023
Although traders and technical analysts aren’t known for accurately predicting how long a bull or bear market might last, independent analyst HornHairs cited historical data from 2015 to estimate how long it will take for Bitcoin to reach a new all-time high.
The bull market from 2015 to 2017 lasted 1,064 days, coinciding with the bull market from 2018 to 2021 that lasted the same number of days. If traders equate the bear market that followed from 2017 to 2018 to 2021 with the current market, it will take 1,001 days for Bitcoin to reach a new all-time high.
$BTC #Bitcoin
2015-2017 bull market: 1064 days
2017-2018 bear market: 364 days2018-2021 bull market: 1064 days
2021-*current* market low: 364 daysDays left until the top if we just carbon copy the cycle timeframe again: 1001 days pic.twitter.com/KoNZxJRuy5
—HornHairs (@CryptoHornHairs) January 12, 2023
Despite the current conditions and the strength of the current price breakout, Bitcoin has proven many technical analysts wrong in the past. Risk-averse traders might consider watching for higher trading volume at higher prices as an indicator of whether Bitcoin is finally back in a bull market.
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