The bear run of the king of cryptos at the end of the race? – The beginning of the year 2023 on Bitcoin seems to smile on the bulls. Indeed, Bitcoin would be on the way to confirming its strong rebound of last week. Especially since the optimism is somewhat returning to cryptocurrencies thanks to a total market capitalization having regained 1000 billion dollars. That being said, the reasons that explain the current return to grace of the king of cryptos, should encourage caution. Because basically, nothing would be written in stone.
Moreover, the prospect of a change in the FED’s monetary policy would not be acquired in 2023, according to doubts by certain members of the FED on the ability to reduce inflation to around 2%. But for the moment, the course of Bitcoin (BTC) does not react to its upheavals and prefers to be in levitation by focusing on the slightest good news.
Now, and in a market context where many investors would like to believe in a fairy tale, let’s review the latest technical analyzes of Bitcoin and the key levels to watch in the context of a possible end of purgatory scenario.
Bitcoin in Weekly Units – Three Weeks Up in a Row?
Probably chaining a third consecutive week on the rise, Bitcoin would validate the crossing of $20,000 or the 2017 ATH. This would constitute a first battle won by the bulls. So that the latest signals in weekly units would allow them to look primarily upwards.
First, breaking the bear run descending line would start to look serious if the rally continues. Secondly, this week’s bullish candle has nothing to envy compared to the previous one. Thirdly, the courtyards succeed in spanning the Kijun. And lately, the Tenkan is starting a slight rebound following the favorable momentum of the price of BTC at the start of the year.
Unfortunately, the war against bears is far from over. And for good reason, the price of Bitcoin and the Chikou Span still remain below the Kumo (Ichimoku Cloud). Even if the second reconnects with prices and the 200-week moving average (MM200 weekly). On the other hand, the thickness of the future Kumo could temper the bulls in view of a favorable trend reversal.
Assuming that next week is in line with the previous three, the situation would become tense for the bears. Because precisely, the price of BTC might approach the weekly 200-MA and the resistance of $26,000, not far from the lower limit of the Kumo, the Senkou Span A (SSA). Which would coincide with a Chikou Span which would return in the direction of the Tenkan. And so, this market scenario would ward off the threat of new lows.
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Bitcoin in daily units – FTX bankruptcy chapter about to be closed
In daily units, yesterday’s bullish candle could be a first psychological turning point on the bull side. Why ? Because the price of Bitcoin is distancing itself beyond $20,000 and the 200-day moving average (MM200 daily). And at the same time, it consolidates its position above the Kumo. Even better, we are in the process of closing the bankruptcy chapter of FTX.
However, the fact that the rebound did not experience a downward breath could reveal signals of excess buying, such as the large gap between prices and the Tenkan. But as long as both are riding bullish momentum like they are right now, I wouldn’t be surprised if the king of cryptos is still treading water for a while. With the feeling that it could climb towards $26,000a level that coincided with failure below the Kumo upper limit last August.
In the event that a rebound abort occurs immediately, it will be interesting to observe if the $20,000 confirms the change in polarity from resistance to support. And if the answer were to be positive, then the price of BTC will make higher lows. This would mean that an uptrend is looming with the aim of neutralizing once and for all its bear run since its last ATH in November 2021. On the other hand, an outright break below the recently crossed thresholds would question the bulls. With the fear that the resumption of the bear run will return to the table.
In summary, Bitcoin is buoyed by good news such as falling dollar and bond rates linked to hopes of a return to normal monetary policy from the FED. The icing on the cake, FTX’s setbacks seem to be partly behind it given that prices are well within the danger zone or precisely $16,000.
Except that all of this remains of the order of an anticipation made by the financial markets, which itself could be counterbalanced at any time. Not only that, inflation in the United States remains high despite the drop in commodity prices. But if it struggles to come down around the central 2% target, the return of a quantitative easing (liquidity injection) would not stand up.
Personally, I think the US central bank will continue to tighten monetary policy until something breaks. Therefore, let’s not talk too soon about the end of purgatory for the king of cryptos. Especially since there is nothing settled concerning the current uncertainties on the financial markets. Above all, high interest rate environments accompanied by a lack of liquidity have historically been conducive to unexpected external shocks. This is why investors should wisely wait for a favorable conjunction between fundamental analysis and technical analysis to increase their cryptocurrency exposures.
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